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Malaysia hikes overseas labour levy to reduce foreign workers
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March 13, 2009 14:22 IST

A recent decision by Malaysian authorities to double the levy on bringing in labour is aimed at discouraging hiring of foreign workers and increasing the salaries of locals in the long run, a senior minister said.

Human resource minister S Subramaniam's remarks came even as eatery owners here warned that if the move is implemented, over 375,000 foreign and local workers in 25,000 Indian, Muslim and Chinese food outlets may lose their jobs.

Subramaniam said apart from the plantation, construction and services sectors where foreign workers would still be allowed, other sectors will see gradual reduction of workers to be replaced by locals. The aim is to reduce foreign workers by as much as half a million by next year, he added.

Apart from employers, local workers should also change their mindset and attitude when it comes to taking up job offers, the minister maintained.

Currently, there are 2.2 million legal foreign workers in Malaysia, with another million illegal foreign workers. Subramaniam said on the average, 20,000 to 30,000 foreign workers' permits which expired every month were not renewed.

To date, around 300,000 foreign workers have been sent to their countries of origin, he added.

Subramaniam said since October 1 last year, 28,000 Malaysians have lost their jobs while another 100,000 faced temporary lay-offs, local papers reported today. 

The minister said some employers created 'artificial working conditions' like requiring workers to work '12 to 24 hours a day', which was why locals shunned the jobs.

Most foreign workers from countries like India, Bangladesh and Indonesia work more than 10 hours a day.

Subramaniam said the hospitality, restaurant and furniture industries had started voicing out their difficulty in operating without foreign workers, and expected other industries to join the chorus.

Citing Indian restaurants as an example, he said they employed cooks from India when they could use the services of locals.

More than 375,000 foreign and local workers in 25,000 Indian, Muslim and Chinese food outlets are at risk of losing their jobs if the foreign worker levy payment is doubled, Malaysian Muslim Restaurant Owners Association president Jamarulkhan Kadir said.

"Not only are foreigners affected, locals will lose their jobs, too. Our suppliers will also be affected because it is all inter-related in our industry," he said.

He explained that on top of the levy, the owners also had to pay for medical, visa charges and insurance.

The Malaysian Indian Restaurant Owners Association president R Ramalingam Pillai urged the government to review the levy for the service sector and cancel it in view of the looming recession.

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