KUCHING: The Sarawak Oil Palm Plantation Owners Association (Soppoa) is deeply concerned and disappointed by the Deputy Prime Minister’s recent announcement on the new levy for foreign workers in the plantation industry in Malaysia.

Soppoa, in a press statement yesterday, said the unprecedented increase from RM590 to RM1,500 levy per foreign worker with effect from Feb 1, 2016, would severely affect plantation companies’ operational cost and budget.

“Soppoa is most disappointed that there was no consultation with the stakeholders on the increase of the levy which will adversely affect the oil palm industry in Malaysia,” the statement added.

Soppoa strongly objects to the sudden and steep increase in foreign workers’ levy and urged the government to review its decision so as not to significantly have adverse impact on the oil palm industry and making it no longer competitive in the market.

“The oil palm industry is already suffering from severe financial burden arising from lower cash flow from depressed prices of palm products, higher labour and production costs, numerous tax structures and rising bank borrowing cost,” the statement elaborated.

“It should also be noted that labour cost will rise by another 15% with the mandated increase in minimum wage to RM920 by July 2016,” it added.

The new foreign workers levy rate will result in a substantial increase of 154% (RM590 to RM1,500) for the plantation sector, and a 147% hike (RM1,010 to RM2,500) for workers in the palm oil mills and related palm oil products manufacturing sector.

Soppoa pointed out that plantation companies in Sarawak were already incurring losses in their operations.

Given that the oil palm industry in Sarawak employed about 90,000 legal foreign workers, it emphasised that the increase in the levy rates would impose on the industry additional cost of over RM82 million annually.

“Due to serious workers’ shortages in the oil palm industry and the need to attract and retain foreign workers, many plantation companies have no alternatives but are forced to absorb the foreign worker levy.

“This added cost could force local companies to reduce their investments or relocate elsewhere, and lead to the decimation of the industry in Sarawak.

“The government, Soppoa said must acknowledge that there are no local workers willing to take over these jobs undertaken by the foreign workers now; new policies that directly and indirectly affects the oil palm industry can and
will have consequences on workers, both locals and foreign alike, who may opt to work elsewhere.

“Therefore, Soppoa earnestly appeal to the Federal Government for the new levy rate to be reviewed so that the oil palm industry can still remain competitive internationally and continue to contribute to the growth and development of the nation.”

Taken from The Borneo Post