ADDRESSING ISSUES FACED BY THE INDUSTRY
Transcript of ADDRESSING ISSUES FACED BY THE INDUSTRY
Contents
Labour and Foreign Workers Issues
Reinvestment Allowance
Energy Issues
Export Strategies
Caring for the Environment
Labour and Foreign Workers
MPMA actively participated and contributed to
the Trade Associations Joint Meetings on
Foreign Workers and Human Resources
Issues, led by the Associated Chinese
Chamber of Commerce and Industries
(ACCCIM), FMM and the Malaysian Employers
Federation (MEF).
Labour and Foreign Workers
Amongst the issues discussed were:
1. Mandatory Online Renewal of Foreign Worker
Permit through MyEG
The Immigration Department issued a notice
that all manual counters would be closed
permanently on 1July 2015 with the full
implementation of Biomedical and eVDR (Visa
Dengan Rujukan) under Foreign Workers
Centralised Management System (FWCMS).
Labour and Foreign Workers1. Mandatory Online Renewal of Foreign Worker Permit through MyEG
In May 2015, the Immigration informed that
after 1 July 2015, manual counters would only
be opened for the following services:
i. Application to replace foreign workers;
ii. VDR application for security guards;
iii. Extension of VDR approval letter.
In view of the urgency of the matter, ACCCIM
proposed to submit a joint letter to the Director-
General of the Immigration Department to
request for an urgent dialogue on counter
closure.
Labour and Foreign Workers1. Mandatory Online Renewal of Foreign Worker Permit through MyEG
The joint letter, sent out in mid June 2015
proposed the following:
i. Trade associations had expressed that the
Manual Counter Service should be made a
choice as the online submissions are too rigid
and cannot cater for all instances and
circumstances.
Labour and Foreign Workers1. Mandatory Online Renewal of Foreign Worker Permit through MyEG
Labour and Foreign Workers1. Mandatory Online Renewal of Foreign Worker Permit through MyEG
ii. Trade Associations were against the proposed
closing of the Manual Counter Service. Should
the online service be proven efficient and is
able to fully cater to the needs of all situations
and circumstances, users will automatically
migrate and use the online service. Until then,
Trade Associations are strongly of the view
that the Manual Counter Service must remain
open.
Labour and Foreign Workers1. Mandatory Online Renewal of Foreign Worker Permit through MyEG
iii. When the migration to online applications have
been successfully proven, then perhaps the
closing of the manual counter service can then
be contemplated but with a caveat that a
Manual HELP DESK be made available to
assist applications with special needs/
circumstances which are beyond the
capability of the online system to process.
Labour and Foreign Workers1. Mandatory Online Renewal of Foreign Worker Permit through MyEG
iv. All outsourcing including MyEG, ISC, OSC,
VLN, etc, are sub-contracted by the
Immigration department and no additional fees
should be imposed on the public. Furthermore,
outsourcing should only be done to make avail
such processes online and to improve the
efficiency and convenience of the public. The
processes outsourced for ISC, OSC and VLN
should only be undertaken if they are to enable
and provide online service.
Labour and Foreign Workers1. Mandatory Online Renewal of Foreign Worker Permit through MyEG
v. The current ISC, OSC and VLN outsourcing be
disbanded immediately unless such
outsourcing is to enable online submissions
and improve the efficiency and are cost
effective to both the Immigration Department
as well as to the applicants.
Labour and Foreign Workers1. Mandatory Online Renewal of Foreign Worker Permit through MyEG
vi. The current outsourcing requiring physical
presence, travelling to only limited centres do
not improve the procedures and cause the
applicant much expense and time to travel
long distance just to submit their applications
and passports, etc. Outsourcing should only
be done if the outsourced processes are
online and no additional costs are imposed
and no additional expenses need to be
expended by the applicants.
Labour and Foreign Workers1. Mandatory Online Renewal of Foreign Worker Permit through MyEG
With the full implementation of BioMedical and
VDR modules under the FWCMS, the
Immigration Department closed all manual
counters permanently on 1 July 2015. The
counter service will only be available for
"serious cases".
Labour and Foreign Workers1. Mandatory Online Renewal of Foreign Worker Permit through MyEG
It was reported in The Star on 9 September
2015 that since the closure of the counter
service, employers who faced delays in the
MyEG online permit renewal were left in the
lurch. Employers facing the delays had written
to both MyEG and Ministry of Home Affairs but
had not received any response from them.
Labour and Foreign Workers
2. 100% Increase in Levy on Foreign Workers
On 30 January 2016, the Government
announced a 100% increase on foreign workers
levy for the manufacturing sector effective
February 2016.
Labour and Foreign Workers2. 100% Increase in Levy on Foreign Workers
This was indeed a very detrimental
announcement by the government and left all
sectors of the country’s businesses in a state of
‘shock’. In view of the severe repercussions of
the drastic levy increase, a total of 55 trade
associations, including MPMA, held a Press
Conference on 2 February 2016 at the
ACCCIM.
Labour and Foreign Workers2. 100% Increase in Levy on Foreign Workers
Immediately after the press conference, the 55
associations submitted a joint memorandum to
five relevant Government Ministries on 2
February requesting for the levy hike to be
shelved and replaced by a comprehensive
move to legalise the existing illegal FW in
Malaysia. (Revenue from rehiring program
more than sufficient to meet the recalibrated
budget shortfall of RM2.5 billion)
Labour and Foreign Workers
On 2 February 2016, MyEG without due notice
nor reason shut down all its services until
further notice. A joint press statement urging
MyEG to immediately reopen its services to
renew visa of legal FW, was drafted.
Labour and Foreign Workers2. 100% Increase in Levy on Foreign Workers
On 5 February, the Government immediately
announced that it will implement a programme effective
15 February to legalise the illegal foreign workers in
Malaysia.
6 February 2016 - the Government announced that the
proposed levy hike is put on hold
16 February - meeting with YB Dato’ Sri Richard Riot
Anak Jaem, Minister of Human Resources. The levy
hike issue, rehiring of undocumented FW and 1.5
million FW from Bangladesh were the key issues raised
during the meetings
Labour and Foreign Workers2. 100% Increase in Levy on Foreign Workers
16 February 2016 - the Director-General of the Ministry
of Home Affairs met with the trade associations to
discuss the proposed levy hike. All associations present
took the stand that the increase must be deferred. The
Ministry, however, informed that it is unlikely that the levy
hike would be deferred further.
Trade associations were requested to propose an
“acceptable” increase/fee to the Government for
consideration on or before 1 March 2106.
A joint meeting was organised by MEF and held on 22
Feb 2106.
Labour and Foreign Workers3. High Fee for Registration of Illegal of Foreign through MyEG
3. High Fee for Registration of Illegal of
Foreign through MyEG
It was reported on 4 September 2015 that
MyEG had been appointed as one of the
companies to register illegal foreign workers in
the country, targeted to start in mid October
2015. A proposed fee of RM5,800 per FW will
be charged. The fee will include handling
charges by MyEG and other cost such as
insurance, FOMEMA, FWCS, Data Card, Levy,
Visa and processing fees.
Labour and Foreign Workers3. High Fee for Registration of Illegal of Foreign through MyEG
A joint meeting was held on 12 October 2015
in ACCCIM to discuss the above. In November
2015, a joint memorandum was sent to the
Ministry of Home Affairs (KDN), proposing the
following:
i. Registration fee to revert to RM700 as in the
6P instead of RM5,800 as it is too costly for
employers to bear.
Labour and Foreign Workers3. High Fee for Registration of Illegal of Foreign through MyEG
ii. Close the ‘loop-holes’ in the previous 6P.
Illegal FWs should exclude the category of FW
who are legal but switched employers thus
deemed them illegal. They should not be
allowed to re-register but should be deported
immediately to discourage them from switching
employers.
Labour and Foreign Workers3. High Fee for Registration of Illegal of Foreign through MyEG
iii. The registration of illegal FW to legal should
be opened to more companies. The award to
only three companies to undertake the
registration of illegal FWs to legal created a
semi-monopoly environment which is
unhealthy. More companies throughout the
country should be allowed to tender for the
registration which will also make it more
convenient for employers through the country
to do the registration.
Labour and Foreign Workers3. High Fee for Registration of Illegal of Foreign through MyEG
iv. Enforcement - When all illegal FWs are
subsequently registered as legal, the issue of illegal
FWs should not arise. Stringent enforcement is
necessary to ensure that all FWs are legal at
source. Hence, the procedures for applying for
FWs should be transparent, easy to follow with
known criteria and guidelines without ambiguities
and affordable (RM700 and not RM5,800). The
system itself should encourage employers to
embrace it and not deter them.
Labour and Foreign Workers3. High Fee for Registration of Illegal of Foreign through MyEG
On 15 February 2016, the Immigration
Department announced that employers need
to pay RM1,200 per FW to register illegal
foreign workers through online services. The
RM1,200 were set by the vendors which
include RM800 for registration and RM400 for
administrative. The total cost to register an
illegal FW will range from RM1,395 to
RM3,485 including fines for immigration
offences, levy, visa processing fees and work
permit.
Labour and Foreign Workers3. High Fee for Registration of Illegal of Foreign through MyEG
A joint statement was drafted requesting that
MOHR and KDN ensure that these exercises
are conducted in a transparent, fair, equitable,
practical and cost effective manner.
At the joint meeting on 22 February organised
by MEF, it was agreed, amongst others, that
the rehiring program must not be cost
prohibitive, and the lessons learnt in the 6P
exercise not be repeated.
Labour and Foreign Workers4. Employment Insurance Scheme
4. Employment Insurance Scheme
MPMA participated at the joint meeting in FMM
on 15 June 2015 to review the proposed
Employment Insurance Scheme (Skim
Insurans Pekerja/SIP).
Labour and Foreign Workers4. Employment Insurance Scheme
Trade associations unanimously agreed that
the SIP should not be implemented for the
following reasons:
i. The scheme will encourage "bad employers"
not to pay compensation to retrenched
workers. It is not fair for other employers to
subsidise the "bad employers".
ii. Other than the employers and employees,
Government should also contribute to the
scheme.
Labour and Foreign Workers4. Employment Insurance Scheme
iii. There is already a provision for layoff/
termination benefits under the Employment
Act. As such, there is no necessity for the two
scheme to co-exist. If the SIP is introduced,
the layoff/termination benefit scheme should
then be abolished.
Labour and Foreign Workers4. Employment Insurance Scheme
iv. The cost benefits are very little. Both employers and
employees will be paying huge amount of funds but
benefiting only to a small group of employees. The fact
is the unemployment rate is only 3% or 400,000
workers which is technically under a full employment.
The 3% unemployment represents mostly the fresh
graduates waiting for jobs and the workers that are
shifting from one job to another. As such, it is not cost
viable to manage a fund which will only benefit a small
group of employees, the cost of managing the fund
eventually may exceed the total pay-outs to
unemployed/retrenched workers.
Labour and Foreign Workers4. Employment Insurance Scheme
v. The scheme does not cover all categories of workers,
those with monthly salary above RM4,000 per month
are excluded.
vi. The existing funding schemes like SOCSO and HRDF
should be extended to cover similar benefits of the
proposed SIP.
MPMA fully supported the views (i - vi) tabled above by
FMM and agreed for FMM to handle the SIP with the
Government.
Labour and Foreign Workers4. Employment Insurance Scheme
Trade Associations agreed that:
i. Employers should object the SIP.
ii. Should the Government insists on the SIP,
MEF would propose an alternative savings
scheme. The scheme would involve
contributions from the employers, employees
and Government. If the participating company
does not retrench any employees, the portion
of the employer's contribution would be
refunded to the company.
Labour and Foreign Workers5. Review of Minimum Wage
5. Review of Minimum Wage
MPMA participated in a high level meeting in
MEF on 9 December 2015, which was held to
collate comments and suggestions to be tabled
for discussion at the NWCC.
Labour and Foreign Workers5. Review of Minimum Wage
MPMA suggested that:
i. The implementation of the increase in minimum
wage be deferred by 12 months effective 1 July
2017 because:
a. SMEs have just implemented MW policy (RM900) for foreign
workers on January 2014, they are still struggling to adjust to
the substantial labour cost increase.
b. The domestic oriented manufacturers are facing the impact
of GST implementation, higher raw material costs due to
weakening ringgit, toll increase, etc.
Labour and Foreign Workers5. Review of Minimum Wage
c. There are several additional costs for employing foreign
workers which are cost additional burden to the
manufacturers, including the Visa Luar Negeri (VLN) fee,
foreign workers passport handling fee imposed by the
handling company, Immigration Security Clearance fee and
FORMEMA health screening fee.
Labour and Foreign Workers5. Review of Minimum Wage
ii. Allowances which are linked to wage including
shift, attendance and Sunday allowances be
included into the definition of minimum wages.
iii. Foreign worker’s levy payment to be deducted
from the workers monthly wages.
iv. Transport and accommodation allowances
should also be included in foreign workers’
minimum wage as per current practice.
Reinvestment Allowance
MPMA has been actively pursuing this issue
with the Government since 2008 by requesting
the Government to extend the RA claimable
period from 15 years to 30 years or longer.
Over the last two years, MPMA frequently
requested other trade associations including
FMM and ACCCIM to also pursue the same.
However, the Government was not in favour of
our proposal because they viewed it as a
revenue forgone in terms of company income
tax.
Chronology of Events on Reinvestment
AllowanceDates Description
15 June 2015 During the 2016 National Budget Consultation Session, MPMA
submitted several issues including the extension of the RA.
23 Sep 2015 Met with Finance Minister II, the Minister supported the idea
and requested MPMA to work with MITI on the detailed
proposal.
30 Sep 2015 MPMA was invited to present the RA proposal to MITI. MPMA
used two hypothetical examples to show that there is potentially
a positive impact on Government’s tax revenue as a result of
extending the RA.
2 Oct 2015 MPMA presented the RA proposal at the Pre-Council Meeting
for Petrochemicals Focus Group, under the National Export
Council.
15 Oct 2015 MPMA made another presentation at the Council Meeting for
Petrochemicals Focus Group, chaired by YB Dato” Sri Abdul
Wahid Omar, Minister in the Prime Minister’s Department.
Chronology of Events on Reinvestment
Allowance
Dates Description
15 Oct 2015 The Minister was supportive of MPMA's RA proposal and
he had requested MPMA to provide some empirical
evidence to show that the two scenarios presented by
MPMA are practical/achievable.
He wanted to see some real examples of the RA effects
on company’s sales and profits, and the subsequent
income tax paid to the Government is actually higher
than the RA tax exempt/forgone by the Government.
MPMA has compiled the data from eight public listed
companies, and submitted the relevant data to the
Minister.
Chronology of Events on Reinvestment
Allowance
Dates Description
23 Oct 2015 During the National Budget presentation, the Prime
Minister cum Minister of Finance announced that for
companies in the manufacturing and agriculture sectors,
whose RA incentive has expired, a new incentive, that is,
Special Reinvestment Allowance, will be provided for
year of assessment 2016 to 2018. The rate of claim is
similar to the existing RA criteria.
MPMA would continue to follow up with the relevant
authorities to push for a longer period in due course.
Energy Issues
Issue MPMA’s Proposal
17 March 2015 EPU informed that:
The Enhanced Time of Use (ETOU) Tariff Scheme be
extended to Tariff D users including Saturdays, Sundays
and Public Holidays effective from 1 January 2017.
The gradual phasing out of the Special Industrial Tariff (SIT)
by 2017, has been extended to 2020.
5 Aug 2015 MPMA submitted a letter to EPU requesting the Energy
Commission and TNB to consider the following:
i. Tariff D - TNB to expedite the process of installing new
meters so that the ETOU Scheme could be implemented at an
earlier date by June 2016 or earlier.
Energy Issues
Issue MPMA’s Proposal
5 Aug 2015 Tariff E - Given that Tariff E users have already installed
electricity meter to measure the energy usage during the
off-peak period, the same meter can be modified to be
used for the ETOU Scheme. The process would be much
faster and arising therefrom, MPMA is of the view that
implementing the ETOU at an earlier date for Tariff E
users would not be an issue for TNB.
MPMA therefore appealed for the earlier implementation
of the ETOU Scheme by 1 January 2016.
Energy Issues
Issue MPMA’s Proposal
27 Aug 2015 EPU informed that TNB will be able to bring forward the
implementation date of the ETOU to 1 January 2016 for
Tariff E. But for Tariff D, the implementation date will
remain as 1 January 2017.
EPU also informed that the Government has agreed to
extend the monthly 2.25 sen per kilowatt electricity bill
rebate for another six months from July to December
2015 for Peninsular Malaysia and Sabah. The rebate was
given in-line with the Government's Imbalance Cost
Pass-Through policy.
Energy Issues
Issue MPMA’s Proposal
4 Nov 2015 The Energy Commission (EC) organised a briefing on the
implementation of Enhance Time-of-Used (EToU)
Scheme and the gradual phasing out of the Special
Industrial Tariff (SIT) Scheme.
The Chief Executive Officer of EC explained that the
EToU Scheme would not be implemented for Tariff D
users in January 2016 because special meters would
need to be installed to capture the actual energy usage
during the peak, off-peak and mid-peak periods, and TNB
would require sufficient time to adjust its billing systems
since majority of its customers are in the D category.
Energy Issues
Issue MPMA’s Proposal
17 Dec 2015 A half day seminar was organised Petaling Jaya, to brief
members on the ETOU and SIT Schemes
14 Jan 2016 The seminar was repeated in Penang for the Northern
Branch members
21 Jan 2016 The seminar was repeated in JB for the Johor Branch
members
Energy Issue
The ETOU is an optional scheme. Members
who are in Tariff E should study in detail
whether this optional scheme will help you to
reduce your electricity bill.
Members who are in Tariff D category will
definitely benefit from the ETOU, which will be
implemented effective 1 January 2017. This is
because the Tariff D users are currently not
entitled for any off-peak rate.
Export Strategies
The Petrochemicals Focus Group was formed
under the National Export Council, chaired by
YB Dato’ Sri Abdul Wahid Omar, Minister in the
Prime Minister’s Department.
The main purpose is to identify strategies to
promote the exports of petrochemical products,
including plastics. MPMA is a member of the
Focus Group.
Export Strategies
The 1st meeting was held on 15 October 2015.
Arising from the meeting, the Minister had
requested for a “tutorial session” for him and his
team to have a better understanding of the
plastics industry.
The two-hour session was successfully held on
16 November 2015. MPMA presented the three
plastics manufacturing processes, i.e. Injection
Moulding, Blow Moulding and Film Extrusion
Export Strategies
The presentations coverage included
technology, products, market and how the
sector supports the other industries. Some
videos, product samples and pictures were also
shown. The presentations emphasised on the
complexity of processes aim to drive home the
point on the necessity for the plastics industry
to continually engage in investment on
machineries and training of manpower to stay
on the cutting edge.
Export Strategies
The Minister was very impressed with all the
presentations and at the end of the session he
had garnered a wide spectrum of insights to the
plastics industry. He was amazed at the
endless streams of industries supported by the
plastics industry - an eye-opener that plastics
has a lot of value-add to the whole chain of the
economy and plastics is a very integrated part
to the petrochemicals industry.
Export Strategies
The outcome of the information-sharing session
was very positive with initiatives coming from
the Minister in the following areas:
1. Reinvestment Allowance (RA)
The Minister agreed to look into the possibility of
further extending the RA period in the near future.
His support did helped as the Government had later
announced the RA extension for another three years
from 2016-2018.
Export Strategies
2. Talent Development Programme (TDP)
The Minister recognised the need for continuous
training and technology knowledge upgrading in
execution of the various manufacturing processes.
MPMA briefed the Minister on the disbursement of
RM3 million grant over the three years programme
(2013-15) of which the Minister was very impressed
with MPMA’s accountability, integrity and training
achievements. There is an indication of a potential
additional funding for the next phase of the TDP.
Export Strategies
MPMA will revisit the TDP and will draft Phase II of
the programme for submission to the Minister for
consideration for additional funding.
The Focus Group has requested MPMA to prepare
the Key Performance Index (KPI) for the Plastics
Industry for 2016-2020 and the Proposed Action
Plans to Achieve the Set KPI
Export Strategies
On 5 February 2016, MPMA has proposed the
following:
1. Assist companies to be suppliers to global
MNCs
Plastics companies find it difficult to sell directly or
be suppliers to global MNCs. In this respect, MPMA
proposes that MATRADE assist plastics companies
to supply to MNCs as well as become 2nd Tier
Suppliers to global MNC 1st Tier Suppliers.
Export Strategies
In this manner, companies can be part of the global
supply chain for MNCs and this would provide the
opportunity for company to move up the value chain
and increase their exports.
MPMA proposed to MATRADE to assist plastic
automotive parts manufacturers to become suppliers
to these global MNC 1st Tier Suppliers, and to assist
other plastics companies to become suppliers for the
MNCs in the E&E and food manufacturing industries.
Export Strategies
2. Technology acquisitions or technology
transfer platforms
Companies are continuously sourcing for advanced
technologies which could contribute to the increase in output,
reduce costs and improve productivity as to remain globally
competitive. Companies are aware of these technologies but
find it difficult to acquire them, or have joint venture with the
technology provider as part of a technology transfer project.
MPMA proposed to MATRADE to assist companies in this area
of technology acquisition or technology transfer. The plastics
companies would identify the potential technology provider so
that MATRADE will be able to bring the parties together.
Export Strategies
3. Organise more Specialised Marketing
Missions or Trade Missions for the plastics
sector
MPMA proposed to MATRADE to organise more
marketing or trade missions for the plastics industry.
The recommended countries for MATRADE’s
consideration are: Australia and New Zealand, Brazil,
major EU countries including England, France,
Germany and Italy, Cambodia, Indonesia, Myanmar,
Vietnam and USA.
Export Strategies
4. Increase the quantum of Market
Development Grant (MDG)
The current ceiling for SMEs is RM200,000 since the
commencement of MDG in 2002. In view of the
increases in various costs and the weakening of the
ringgit, MPMA proposes that the ceiling of MDG be
increased to RM500,000.
Export Strategies
5. Government rebates for companies
exploring new markets
MPMA proposes that the Government provides
rebates in the form of tax incentives for companies
exploring new markets at the initial or early stages of
market development, similar to the rebates provided
by the Chinese Government to their companies.
Export Strategies
6. Export promotion activities/facilities in
overseas
MATRADE to assist the industry by providing the
following:
Arrangement for exhibits at customer’s place, similar
to the arrangement organised by KOTRA between
the Korean auto parts suppliers and Ford Motor.
Export Strategies
Incubator office space, either at MATRADE offices
overseas or in strategic overseas locations for SMEs
to utilise for marketing activities.
Networking sessions, preferably with mini exhibitions,
for companies to meet overseas customers at
MATRADE overseas offices on Malaysian
Embassies.
Environment
Advocacy
With increasing State Governments wanting to ban
polystyrene (PS) and plastic bags usage, the need to
educate and re-set the mind-set of the public is
pertinent that PS and plastic bags are not the culprit
to environment deterioration but littering and waste
management is the cause.
MPMA will also seek the good office of the Minister
for a tutorial session on Advocacy with the relevant
Government Authority.
Environment
The first advocacy session was successfully held on
1 December 2015 with YB Datuk Seri Wan Junaidi,
Tuanku Jaafar, Minister of Natural Resources and
Environment (MNRE).
Environment
MPMA had compiled the following list of
Ministers for YB Dato' Sri Abdul Wahid Omar’s
office to arrange the advocacy sessions:
1. Minister of Local Government and Housing (deal with Solid Waste)
2. Minister of Domestic Trade and Consumerism (deals with
supermarkets)
3. Green Technology
4. Minister of Science, Technology and Information
5. Minister of Education
6. Minister of Higher Education
7. Minister of Health
Litter Free Ramadan 2015
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