KUALA LUMPUR (July 30): The Federation of Malaysian Manufacturers (FMM) has slammed the Ministry of Human Resources' announcement about limiting the hiring of foreign workers to only three sectors — construction, plantation and agriculture — as shocking, unacceptable and done without prior consultation with stakeholders.

FMM president Tan Sri Soh Thian Lai (pictured) said the announcement was "very sudden" and lacked details on the mechanism of implementation.

"The government has not given due consideration to the significant impact on business sustainability and the socio-economic consequences of this announcement, particularly in the current depressed business climate.

"FMM strongly objects to this sudden announcement, which would put the manufacturing sector at a great disadvantage and would cripple most of the manufacturing sector in the country including the exporters, who are one of the main revenue contributors to the economy," said Soh in a statement yesterday.

He further said that limiting construction workers to the three sectors would be detrimental and that the abrupt ceasing of the hiring of foreign workers would result in disruptions to the supply chains, putting business sustainability and jobs at stake, even for local workers.

The government, Soh said, should look at the manufacturing ecosystem in totality by considering all relevant factors that would have an impact on it — not only specific issues in isolation.

While the federation is aware of the need to reduce dependence on foreign workers, he said any policy changes should be pre-announced and done gradually to allow companies to adjust.

Given that manpower makes up 20% of operating costs, market-based mechanisms would drive industries to base their business decisions on stepping up investments in automation to reduce the need for manpower, especially foreign workers, he said.

"FMM hopes that the government would reconsider this very drastic policy decision and call industry stakeholders to discuss and work together on a more acceptable solution for all to be implemented only when economic conditions improve," Soh said.

Soh also said FMM has been urging the government to move towards a multi-tier levy mechanism, under which the foreign worker levy can be determined based on the number of foreign workers employed as a percentage of the total workers employed by a company. This levy can then be gradually increased, with the industry being notified well in advance.

"FMM hopes that this matter (foreign worker intake) can be resolved expediently to avoid any deleterious effects on our economy. We hope that the government will consult with the industry and develop transparent, consistent and stable policies that are very important for the business community.

"In the meantime, the FMM urges the government to review its decision to limit the employment of foreign workers for only the three named sectors as announced today," added Soh.

Earlier yesterday, Deputy Human Resources Minister Awang Hashim said only the three sectors will be allowed to employ foreign workers in the future to cut the nation's reliance on foreign workers. Other sectors that currently use foreign workers, Awang said, will be required to employ locals instead.

"The government has previously announced its move to reduce our reliance on foreign workers. Currently, there are more than two million foreign workers registered with the Ministry of Human Resources," Awang said in Dewan Rakyat.

"We have decided to only allow the three sectors to employ foreign workers [in the future]," he added.

Awang was responding to a question from Lubok Antu member of Parliament Jugah Muyang about initiatives taken by the government to reduce the number of foreign workers in Malaysia.

It is understood that the hiring of foreign workers has been frozen until year end, with the government considering allowing the construction, plantation and agriculture sectors to hire foreign workers next year.

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