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NEWS UPDATES Asean Affairs                       27  August 2011

Tax on foreign workers increased

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The tax on foreign workers in all sectors will be increased by RM50 effective September 1 a move that employers and even Indonesian authorities oppose.

The new levy for maids and agriculture workers will be RM410; plantation (RM590); production and construction (RM1,250); and service sector (RM1,850).

The new rates for Sabah, Sarawak and Labuan would be RM1,010 for workers in the production and construction sectors, and RM1,490 for the service sector.

For the other sectors, the levies are the same as in the peninsula.

Home Ministry secretary-general Tan Sri Mahmood Adam, who announced the increase yesterday, said it was among the initiatives suggested by the foreign national management laboratory.

“The decision was made after careful consideration including taking into account that the last increase was in 2005,” he said in a statement yesterday.

Malaysian Employers Federation (MEF) executive director Shamsuddin Bardan said the extra RM50 levy charged would cost employers a total of RM85mil, based on the 1.7 million legal foreign workers in the country.

“We do not support the move although we support the government's plan to reduce dependence on foreign workers,” he said.

Malaysian Association of Foreign Maid Agencies (Papa) acting president Jeffrey Foo said the increase would not affect their business but employers would object.

The Indonesian Embassy, meanwhile, has threatened to increase the minimum wage for all its workers in Malaysia if the RM50 levy increase is maintained.

“The majority of Indonesian workers in the country are still paying for their own levy. No action has been taken against the employers who are supposed to be paying the levy,” said the embassy's minister counsellor for information, social and cultural affairs Suryana Sastradiredja. “We will increase the wages effective Sept 1. Take it or leave it.”

There are about 900,000 Indonesian workers in the country.

Mahmood, in his announcement, said the existing rates would still apply for all first-time applications received by the ministry before Thursday.

“The old rates are also applicable for application for an extension of the temporary working visit passes which expire before September 1.

For maids, the new levy for second and subsequent domestic workers was RM590, he added.

Mahmood said the levy increase was to cover the costs incurred by the Government in implementing the biometric system for the registration of foreign workers as well as upgrading the Immigration Department's computer system.


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