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No More Recruiting Foreign Workers through Agents Next Year

October 30, 2018

Malaysian individuals or companies who want to hire foreign workers no longer have to do it through middlemen such as agents soon.

Preciously handled by the home ministry, this matter will be taken over by the human resources ministry. The joint committee between the two ministries on the management of foreign workers has decided to discontinue the practice of outsourcing migrant workers hiring to agencies as early as next year.

So far, there are at least 100 companies handling over 26,000 foreign workers involved in the outsourcing system in Malaysia, said Home Minister Tan Sri Muhyiddin Yassin. The committee will hold negotiations with these companies to discuss about the new arrangement later.

“We are giving them (existing agents) some time so they can decide to relocate their employees to selected employers. This will take some time and we will let the human resources ministry handle it,” Mr. Yassin said.

“Our goal is to avoid undesirable things happening [to the foreign workers]. There [have] been complaints [about the outsourcing agencies], that there is unfair treatment of the workers, cases of human trafficking, and various issues related to foreign workers,” he added.

As of Sept 30, Mr. Yassin noted that a total of 1,892,247 foreign workers had been issued temporary passes by the immigration department. Indonesia, Bangladesh, Nepal, India and Myanmar are the top five countries from where Malaysia sources foreign workers, The Edge Markets reports.

See: UOB Launches First Engagement Lab in Southeast Asia

The committee also plans to implement a multi-tier levy system, which is expected to result in a 20 percent or higher increase in levy by next year. According to Mr. Yassin, the decision will be subject to the cabinet’s approval.

“The quantum of levy, as per regard to respective sectors, will have to be looked at again so that it will not be too burdensome. But generally from the figures that we have worked out, roughly [it will be] an increment of about 20% over the present levy, so it’s not that big. But in some sub-sectors or some other sectors, it will be slightly bigger.”

Elaborating on the multi-tier levy, Human Resources Minister M Kulasegaran said the system is based on the principle of the more foreign workers hired, the higher the levy imposed. “The system has been used in Singapore for years, whereby foreign employment is subject to the ratio of how many new local workers to foreign workers are allowed.”

Mr. Kulasegaran said the quantum of the levy has yet to be determined but it will differ according to different industries. But as a point of reference, the current levy imposed will be used for the first tier of the levy.

“Even the quantum has not been agreed on, so the time frame is not certain yet, but it (the implementation) will be sometime next year,” he said.

“All this (levy) is tax deductible, so there isn’t a big problem on that issue. But I think we also need to use a certain amount of the money to train our workers to make them more adequately employable in all kinds of sectors, and not forgetting [training for] automation.

“These are things that we also want to encourage, otherwise it will be a situation where we are always in need of foreign workers,” Kulasegaran added.

Read also: Fewer Retrenchments and Slightly Higher Unemployment Rate for Singaporeans in Q3

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