Tan Sri Soh Thian Lai.
KUALA LUMPUR: The Ministry of Investment, Trade and Industry's (MITI) move to defer the enforcement of the 80:20 local-to-foreign worker employment ratio reflects a practical approach to addressing industry challenges, according to the Federation of Malaysian Manufacturers (FMM).
In a statement, FMM said the decision recognises the manufacturing sector's ongoing struggles with labour shortages and the mismatch between local workforce skills and industry requirements, pending the implementation of the multi-tier levy mechanism (MTLM).
“The deferment is both practical and timely, ensuring continuity in operations and protecting Malaysia’s global competitiveness while providing industries with a transition period to prepare for the structural changes required,” it said.
The 80:20 policy, while aiming to reduce reliance on foreign workers, presents significant challenges for manufacturers in labour-intensive and low-skilled sectors, where local participation remains limited despite efforts to improve wages and benefits.
The deferment enables the industry to focus on long-term strategies, including increasing automation, modernising production processes, and investing in upskilling and reskilling local workers to meet the demands of higher-value roles.
“The 80:20 policy, while aiming to reduce reliance on foreign workers, presents significant challenges for manufacturers in labour-intensive and low-skilled sectors, where local participation remains limited despite efforts to improve wages and benefits,” FMM president Tan Sri Soh Thian Lai.
“The deferment allows the industry to adopt long-term strategies such as increasing automation, modernising production processes, and investing in the upskilling and reskilling of local workers to meet the demands of new, higher-value roles,” he added.
Once implemented, the MTLM will provide a structured, demand-driven approach to labour management. With tiered levies encouraging industries to reduce reliance on foreign labour, it will allow companies to hire based on operational needs. This will support a gradual and sustainable transition to a more balanced workforce model.
“In this regard, FMM reiterates its call for the early release of details on the MTLM implementation. Ideally, the details should be announced six months in advance of implementation to give industries sufficient time to adapt to the upcoming changes, particularly since the implementation will have cost implications and require adjustments to budgets and business operations,” Soh said.
