‘Levy hike to impact construction industry’

KUALA LUMPUR: Construction industry experts warned of additional costs being passed on to property buyers following the increase in foreign workers’ levy.

Master Builders Association (MBAM) even cautioned that the prices of houses could increase owing to this reason.

“The levy hike will impact the construction industry,” said MBAM deputy president Foo Chek Lee.

He said there were about 130 sub-sectors including manufacturing and services, which would pass the cost back to the industry.

“Ultimately, we will pass the additional costs to the end users or purchasers,” he said.

The Government, he added, should instead look into legalising the existing illegal foreign workers.

“By doing so, this will bring in extra revenue to the Government instead of increasing the levy,” said Foo in a press conference yesterday.

MBAM said the construction industry was looking at a 10% increase in labour cost and a 2% increase in overall costs.

“Two per cent is the bottom line for some of us. The profit margin in construction is usually a single digit. Some don’t even make 2%,” said former president Kwan Foh-Kwai.

The association’s vice-president Tan Sri A.K. Nathan said the Government should also understand that the construction industry could not operate without foreign workers.

“It is almost impossible to get local workers. This is a fact,” he said.

The association said locals were not willing to work in the construction industry despite the willingness of the industry players to train them.

“Malaysians don’t even want to work as crane operators.

“We are willing to train them and pay as high as RM3,000 a month, but they are not interested.

“They prefer to work in air conditioned areas with short hours.”

He said foreign labourers were usually paid just above the minimum wage, but with overtime, they could take home RM2,000 to RM3,000 a month.

MIC Youth chief C. Sivarraajh said about 80% of small and medium scale enterprises (SMEs) would try to survive the increase in levies by passing the additional cost to customers or shutting their operations.

“Business sustainability is at stake. Jobs are also at stake, even for local workers when businesses find great difficulty in sustaining their operations,” he said in a statement.

The new charges, which were announced on Sunday, would see the foreign worker levy for manufacturing, construction and service sectors being increased to RM2,500.

The levy for those in the plantation and agriculture sectors had been raised to RM1,500.

Previously, the levy was between RM410 and RM1,850, depending on the industry and the location.

Sivarraajh said the Government should have consulted stakeholders before imposing the levy hike.

He said businesses were already paying a hefty cost such as the new minimum wage, higher costs of energy and raw materials, but lower sales as a result of the weakening ringgit.

“Everybody will suffer from the raise – plantation, construction, services – because all sectors employ foreign workers extensively.”