Govt Postpones Multi-Tier Levy System for Foreign Workers to 2022

Human Resources Minister Datuk Seri M. Saravanan has postponed the implementation of the multi-tier levy system for foreign workers' employment to January 1, 2022. 

In a statement, the minister said that the ministry made the decision in a Cabinet meeting on June 2. The government initially scheduled the multi-tier levy system to take effect on January 1, 2021, but then postponed it to July 1, 2021.

He said that the decision considers the issues posed by the pandemic that affect the health and economic sectors and, in turn, has a significant impact on various industries. 

Saravanan stated once the government implements the multi-tier levy, the actual needs of the industry would decide on the employment of foreign workers.

He said that the system would reduce Malaysia's high dependence on foreign workers because the levy rate would increase based on the dependency ceiling. 

The minister also said that the government would use the Foreign Workers Centralised Management System's (FWCMS) eQuota module to implement the levy system.

He added that the module would ensure the transparency of determining the foreign worker quota to employers. The government would also use the module to recruit new foreign workers from source countries.

 

History of the multi-tier levy system in Malaysia

In October 2018, a joint committee between the Ministry of Human Resources and the Ministry of Home Affairs had accepted the proposal to implement a multi-tier levy system to recruit foreign workers.

The then-Minister of Human Resources M. Kulasegaran said the system is according to the principle that the more foreign workers hired, the higher the levy imposed. He added that Singapore also used the multi-tier levy system for years. 

In February 2019, the same joint committee declared that the multi-tier levy system would begin on January 1, 2020. Then-Home Minister Muhyiddin Yassin said the implementation would consider the aspects of data integration and the readiness of the government and employers in the formal sectors, specifically agriculture and manufacturing.

Muhyiddin said employers would be informed of the levy system before it is implemented.

He said that the foreign workers' dependency ratio for the multi-tier levy system was only allowed up to 75% in the manufacturing sector. 

"In this case, a committee will be set up to assess the needs of the employers or companies in the manufacturing sector that hire foreign workers beyond the allowed ratio on a case-by-case basis.

"This is to make sure that the company's operations are not affected," he said.

According to Muhyiddin, each level has a different levy. The Foreign Workers' Management Independent Committee includes all proposes for the levy amount. 

 

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