Roadshow 2016 ADDRESSING ISSUES FACED BY THE INDUSTRY

Transcription

1 Roadshow 2016 ADDRESSING ISSUES FACED BY THE INDUSTRY

2 Contents Labour and Foreign Workers Issues Reinvestment Allowance Energy Issues Export Strategies Caring for the Environment

3 Labour and Foreign Workers MPMA actively participated and contributed to the Trade Associations Joint Meetings on Foreign Workers and Human Resources Issues, led by the Associated Chinese Chamber of Commerce and Industries (ACCCIM), FMM and the Malaysian Employers Federation (MEF).

4 Labour and Foreign Workers Amongst the issues discussed were: 1. Mandatory Online Renewal of Foreign Worker Permit through MyEG The Immigration Department issued a notice that all manual counters would be closed permanently on 1July 2015 with the full implementation of Biomedical and evdr (Visa Dengan Rujukan) under Foreign Workers Centralised Management System (FWCMS).

5 Labour and Foreign Workers 1. Mandatory Online Renewal of Foreign Worker Permit through MyEG In May 2015, the Immigration informed that after 1 July 2015, manual counters would only be opened for the following services: i. Application to replace foreign workers; ii. iii. VDR application for security guards; Extension of VDR approval letter.

6 Labour and Foreign Workers 1. Mandatory Online Renewal of Foreign Worker Permit through MyEG In view of the urgency of the matter, ACCCIM proposed to submit a joint letter to the Director- General of the Immigration Department to request for an urgent dialogue on counter closure.

7 Labour and Foreign Workers 1. Mandatory Online Renewal of Foreign Worker Permit through MyEG The joint letter, sent out in mid June 2015 proposed the following: i. Trade associations had expressed that the Manual Counter Service should be made a choice as the online submissions are too rigid and cannot cater for all instances and circumstances.

8 Labour and Foreign Workers 1. Mandatory Online Renewal of Foreign Worker Permit through MyEG ii. Trade Associations were against the proposed closing of the Manual Counter Service. Should the online service be proven efficient and is able to fully cater to the needs of all situations and circumstances, users will automatically migrate and use the online service. Until then, Trade Associations are strongly of the view that the Manual Counter Service must remain open.

9 Labour and Foreign Workers 1. Mandatory Online Renewal of Foreign Worker Permit through MyEG iii. When the migration to online applications have been successfully proven, then perhaps the closing of the manual counter service can then be contemplated but with a caveat that a Manual HELP DESK be made available to assist applications with special needs/ circumstances which are beyond the capability of the online system to process.

10 Labour and Foreign Workers 1. Mandatory Online Renewal of Foreign Worker Permit through MyEG iv. All outsourcing including MyEG, ISC, OSC, VLN, etc, are sub-contracted by the Immigration department and no additional fees should be imposed on the public. Furthermore, outsourcing should only be done to make avail such processes online and to improve the efficiency and convenience of the public. The processes outsourced for ISC, OSC and VLN should only be undertaken if they are to enable and provide online service.

11 Labour and Foreign Workers 1. Mandatory Online Renewal of Foreign Worker Permit through MyEG v. The current ISC, OSC and VLN outsourcing be disbanded immediately unless such outsourcing is to enable online submissions and improve the efficiency and are cost effective to both the Immigration Department as well as to the applicants.

12 Labour and Foreign Workers 1. Mandatory Online Renewal of Foreign Worker Permit through MyEG vi. The current outsourcing requiring physical presence, travelling to only limited centres do not improve the procedures and cause the applicant much expense and time to travel long distance just to submit their applications and passports, etc. Outsourcing should only be done if the outsourced processes are online and no additional costs are imposed and no additional expenses need to be expended by the applicants.

13 Labour and Foreign Workers 1. Mandatory Online Renewal of Foreign Worker Permit through MyEG With the full implementation of BioMedical and VDR modules under the FWCMS, the Immigration Department closed all manual counters permanently on 1 July The counter service will only be available for "serious cases".

14 Labour and Foreign Workers 1. Mandatory Online Renewal of Foreign Worker Permit through MyEG It was reported in The Star on 9 September 2015 that since the closure of the counter service, employers who faced delays in the MyEG online permit renewal were left in the lurch. Employers facing the delays had written to both MyEG and Ministry of Home Affairs but had not received any response from them.

15 Meeting at ACCCIM

16 Labour and Foreign Workers % Increase in Levy on Foreign Workers On 30 January 2016, the Government announced a 100% increase on foreign workers levy for the manufacturing sector effective February 2016.

17 Labour and Foreign Workers % Increase in Levy on Foreign Workers This was indeed a very detrimental announcement by the government and left all sectors of the country s businesses in a state of shock. In view of the severe repercussions of the drastic levy increase, a total of 55 trade associations, including MPMA, held a Press Conference on 2 February 2016 at the ACCCIM.

18 Labour and Foreign Workers % Increase in Levy on Foreign Workers Immediately after the press conference, the 55 associations submitted a joint memorandum to five relevant Government Ministries on 2 February requesting for the levy hike to be shelved and replaced by a comprehensive move to legalise the existing illegal FW in Malaysia. (Revenue from rehiring program more than sufficient to meet the recalibrated budget shortfall of RM2.5 billion)

19 Labour and Foreign Workers On 2 February 2016, MyEG without due notice nor reason shut down all its services until further notice. A joint press statement urging MyEG to immediately reopen its services to renew visa of legal FW, was drafted.

20 Labour and Foreign Workers % Increase in Levy on Foreign Workers On 5 February, the Government immediately announced that it will implement a programme effective 15 February to legalise the illegal foreign workers in Malaysia. 6 February the Government announced that the proposed levy hike is put on hold 16 February - meeting with YB Dato Sri Richard Riot Anak Jaem, Minister of Human Resources. The levy hike issue, rehiring of undocumented FW and 1.5 million FW from Bangladesh were the key issues raised during the meetings

21 Labour and Foreign Workers % Increase in Levy on Foreign Workers 16 February the Director-General of the Ministry of Home Affairs met with the trade associations to discuss the proposed levy hike. All associations present took the stand that the increase must be deferred. The Ministry, however, informed that it is unlikely that the levy hike would be deferred further. Trade associations were requested to propose an acceptable increase/fee to the Government for consideration on or before 1 March A joint meeting was organised by MEF and held on 22 Feb 2106.

22 Press Conference at ACCCIM on 2 February 2016

23 Labour and Foreign Workers 3. High Fee for Registration of Illegal of Foreign through MyEG 3. High Fee for Registration of Illegal of Foreign through MyEG It was reported on 4 September 2015 that MyEG had been appointed as one of the companies to register illegal foreign workers in the country, targeted to start in mid October A proposed fee of RM5,800 per FW will be charged. The fee will include handling charges by MyEG and other cost such as insurance, FOMEMA, FWCS, Data Card, Levy, Visa and processing fees.

24 Labour and Foreign Workers 3. High Fee for Registration of Illegal of Foreign through MyEG A joint meeting was held on 12 October 2015 in ACCCIM to discuss the above. In November 2015, a joint memorandum was sent to the Ministry of Home Affairs (KDN), proposing the following: i. Registration fee to revert to RM700 as in the 6P instead of RM5,800 as it is too costly for employers to bear.

25 Labour and Foreign Workers 3. High Fee for Registration of Illegal of Foreign through MyEG ii. Close the loop-holes in the previous 6P. Illegal FWs should exclude the category of FW who are legal but switched employers thus deemed them illegal. They should not be allowed to re-register but should be deported immediately to discourage them from switching employers.

26 Labour and Foreign Workers 3. High Fee for Registration of Illegal of Foreign through MyEG iii. The registration of illegal FW to legal should be opened to more companies. The award to only three companies to undertake the registration of illegal FWs to legal created a semi-monopoly environment which is unhealthy. More companies throughout the country should be allowed to tender for the registration which will also make it more convenient for employers through the country to do the registration.

27 Labour and Foreign Workers 3. High Fee for Registration of Illegal of Foreign through MyEG iv. Enforcement - When all illegal FWs are subsequently registered as legal, the issue of illegal FWs should not arise. Stringent enforcement is necessary to ensure that all FWs are legal at source. Hence, the procedures for applying for FWs should be transparent, easy to follow with known criteria and guidelines without ambiguities and affordable (RM700 and not RM5,800). The system itself should encourage employers to embrace it and not deter them.

28 Labour and Foreign Workers 3. High Fee for Registration of Illegal of Foreign through MyEG On 15 February 2016, the Immigration Department announced that employers need to pay RM1,200 per FW to register illegal foreign workers through online services. The RM1,200 were set by the vendors which include RM800 for registration and RM400 for administrative. The total cost to register an illegal FW will range from RM1,395 to RM3,485 including fines for immigration offences, levy, visa processing fees and work permit.

29 Labour and Foreign Workers 3. High Fee for Registration of Illegal of Foreign through MyEG A joint statement was drafted requesting that MOHR and KDN ensure that these exercises are conducted in a transparent, fair, equitable, practical and cost effective manner. At the joint meeting on 22 February organised by MEF, it was agreed, amongst others, that the rehiring program must not be cost prohibitive, and the lessons learnt in the 6P exercise not be repeated.

30 Labour and Foreign Workers 4. Employment Insurance Scheme 4. Employment Insurance Scheme MPMA participated at the joint meeting in FMM on 15 June 2015 to review the proposed Employment Insurance Scheme (Skim Insurans Pekerja/SIP).

31 Labour and Foreign Workers 4. Employment Insurance Scheme Trade associations unanimously agreed that the SIP should not be implemented for the following reasons: i. The scheme will encourage "bad employers" not to pay compensation to retrenched workers. It is not fair for other employers to subsidise the "bad employers". ii. Other than the employers and employees, Government should also contribute to the scheme.

32 Labour and Foreign Workers 4. Employment Insurance Scheme iii. There is already a provision for layoff/ termination benefits under the Employment Act. As such, there is no necessity for the two scheme to co-exist. If the SIP is introduced, the layoff/termination benefit scheme should then be abolished.

33 Labour and Foreign Workers 4. Employment Insurance Scheme iv. The cost benefits are very little. Both employers and employees will be paying huge amount of funds but benefiting only to a small group of employees. The fact is the unemployment rate is only 3% or 400,000 workers which is technically under a full employment. The 3% unemployment represents mostly the fresh graduates waiting for jobs and the workers that are shifting from one job to another. As such, it is not cost viable to manage a fund which will only benefit a small group of employees, the cost of managing the fund eventually may exceed the total pay-outs to unemployed/retrenched workers.

34 Labour and Foreign Workers 4. Employment Insurance Scheme v. The scheme does not cover all categories of workers, those with monthly salary above RM4,000 per month are excluded. vi. The existing funding schemes like SOCSO and HRDF should be extended to cover similar benefits of the proposed SIP. MPMA fully supported the views (i - vi) tabled above by FMM and agreed for FMM to handle the SIP with the Government.

35 Labour and Foreign Workers 4. Employment Insurance Scheme Trade Associations agreed that: i. Employers should object the SIP. ii. Should the Government insists on the SIP, MEF would propose an alternative savings scheme. The scheme would involve contributions from the employers, employees and Government. If the participating company does not retrench any employees, the portion of the employer's contribution would be refunded to the company.

36 Labour and Foreign Workers 5. Review of Minimum Wage 5. Review of Minimum Wage MPMA participated in a high level meeting in MEF on 9 December 2015, which was held to collate comments and suggestions to be tabled for discussion at the NWCC.

37 Labour and Foreign Workers 5. Review of Minimum Wage MPMA suggested that: i. The implementation of the increase in minimum wage be deferred by 12 months effective 1 July 2017 because: a. SMEs have just implemented MW policy (RM900) for foreign workers on January 2014, they are still struggling to adjust to the substantial labour cost increase. b. The domestic oriented manufacturers are facing the impact of GST implementation, higher raw material costs due to weakening ringgit, toll increase, etc.

38 Labour and Foreign Workers 5. Review of Minimum Wage c. There are several additional costs for employing foreign workers which are cost additional burden to the manufacturers, including the Visa Luar Negeri (VLN) fee, foreign workers passport handling fee imposed by the handling company, Immigration Security Clearance fee and FORMEMA health screening fee.

39 Labour and Foreign Workers 5. Review of Minimum Wage ii. Allowances which are linked to wage including shift, attendance and Sunday allowances be included into the definition of minimum wages. iii. Foreign worker s levy payment to be deducted from the workers monthly wages. iv. Transport and accommodation allowances should also be included in foreign workers minimum wage as per current practice.

40 Reinvestment Allowance MPMA has been actively pursuing this issue with the Government since 2008 by requesting the Government to extend the RA claimable period from 15 years to 30 years or longer. Over the last two years, MPMA frequently requested other trade associations including FMM and ACCCIM to also pursue the same. However, the Government was not in favour of our proposal because they viewed it as a revenue forgone in terms of company income tax.

41 Chronology of Events on Reinvestment Allowance Dates Description 15 June 2015 During the 2016 National Budget Consultation Session, MPMA submitted several issues including the extension of the RA. 23 Sep 2015 Met with Finance Minister II, the Minister supported the idea and requested MPMA to work with MITI on the detailed proposal. 30 Sep 2015 MPMA was invited to present the RA proposal to MITI. MPMA used two hypothetical examples to show that there is potentially a positive impact on Government s tax revenue as a result of extending the RA. 2 Oct 2015 MPMA presented the RA proposal at the Pre-Council Meeting for Petrochemicals Focus Group, under the National Export Council. 15 Oct 2015 MPMA made another presentation at the Council Meeting for Petrochemicals Focus Group, chaired by YB Dato Sri Abdul Wahid Omar, Minister in the Prime Minister s Department.

42 Chronology of Events on Reinvestment Allowance Dates Description 15 Oct 2015 The Minister was supportive of MPMA's RA proposal and he had requested MPMA to provide some empirical evidence to show that the two scenarios presented by MPMA are practical/achievable. He wanted to see some real examples of the RA effects on company s sales and profits, and the subsequent income tax paid to the Government is actually higher than the RA tax exempt/forgone by the Government. MPMA has compiled the data from eight public listed companies, and submitted the relevant data to the Minister.

43 Chronology of Events on Reinvestment Allowance Dates Description 23 Oct 2015 During the National Budget presentation, the Prime Minister cum Minister of Finance announced that for companies in the manufacturing and agriculture sectors, whose RA incentive has expired, a new incentive, that is, Special Reinvestment Allowance, will be provided for year of assessment 2016 to The rate of claim is similar to the existing RA criteria. MPMA would continue to follow up with the relevant authorities to push for a longer period in due course.

44 Meeting with Minister of Finance II on 23 September 2015

45 Energy Issue

46 Energy Issues Issue MPMA s Proposal 17 March 2015 EPU informed that: The Enhanced Time of Use (ETOU) Tariff Scheme be extended to Tariff D users including Saturdays, Sundays and Public Holidays effective from 1 January The gradual phasing out of the Special Industrial Tariff (SIT) by 2017, has been extended to Aug 2015 MPMA submitted a letter to EPU requesting the Energy Commission and TNB to consider the following: i. Tariff D - TNB to expedite the process of installing new meters so that the ETOU Scheme could be implemented at an earlier date by June 2016 or earlier.

47 Energy Issues Issue MPMA s Proposal 5 Aug 2015 Tariff E - Given that Tariff E users have already installed electricity meter to measure the energy usage during the off-peak period, the same meter can be modified to be used for the ETOU Scheme. The process would be much faster and arising therefrom, MPMA is of the view that implementing the ETOU at an earlier date for Tariff E users would not be an issue for TNB. MPMA therefore appealed for the earlier implementation of the ETOU Scheme by 1 January 2016.

48 Energy Issues Issue MPMA s Proposal 27 Aug 2015 EPU informed that TNB will be able to bring forward the implementation date of the ETOU to 1 January 2016 for Tariff E. But for Tariff D, the implementation date will remain as 1 January EPU also informed that the Government has agreed to extend the monthly 2.25 sen per kilowatt electricity bill rebate for another six months from July to December 2015 for Peninsular Malaysia and Sabah. The rebate was given in-line with the Government's Imbalance Cost Pass-Through policy.

49 Energy Issues Issue MPMA s Proposal 4 Nov 2015 The Energy Commission (EC) organised a briefing on the implementation of Enhance Time-of-Used (EToU) Scheme and the gradual phasing out of the Special Industrial Tariff (SIT) Scheme. The Chief Executive Officer of EC explained that the EToU Scheme would not be implemented for Tariff D users in January 2016 because special meters would need to be installed to capture the actual energy usage during the peak, off-peak and mid-peak periods, and TNB would require sufficient time to adjust its billing systems since majority of its customers are in the D category.

50 Energy Issues Issue MPMA s Proposal 17 Dec 2015 A half day seminar was organised Petaling Jaya, to brief members on the ETOU and SIT Schemes 14 Jan 2016 The seminar was repeated in Penang for the Northern Branch members 21 Jan 2016 The seminar was repeated in JB for the Johor Branch members

51 Energy Issue The ETOU is an optional scheme. Members who are in Tariff E should study in detail whether this optional scheme will help you to reduce your electricity bill. Members who are in Tariff D category will definitely benefit from the ETOU, which will be implemented effective 1 January This is because the Tariff D users are currently not entitled for any off-peak rate.

52 Export Strategies The Petrochemicals Focus Group was formed under the National Export Council, chaired by YB Dato Sri Abdul Wahid Omar, Minister in the Prime Minister s Department. The main purpose is to identify strategies to promote the exports of petrochemical products, including plastics. MPMA is a member of the Focus Group.

53 Export Strategies The 1st meeting was held on 15 October Arising from the meeting, the Minister had requested for a tutorial session for him and his team to have a better understanding of the plastics industry. The two-hour session was successfully held on 16 November MPMA presented the three plastics manufacturing processes, i.e. Injection Moulding, Blow Moulding and Film Extrusion

54 Export Strategies The presentations coverage included technology, products, market and how the sector supports the other industries. Some videos, product samples and pictures were also shown. The presentations emphasised on the complexity of processes aim to drive home the point on the necessity for the plastics industry to continually engage in investment on machineries and training of manpower to stay on the cutting edge.

55 Export Strategies The Minister was very impressed with all the presentations and at the end of the session he had garnered a wide spectrum of insights to the plastics industry. He was amazed at the endless streams of industries supported by the plastics industry - an eye-opener that plastics has a lot of value-add to the whole chain of the economy and plastics is a very integrated part to the petrochemicals industry.

56 Export Strategies The outcome of the information-sharing session was very positive with initiatives coming from the Minister in the following areas: 1. Reinvestment Allowance (RA) The Minister agreed to look into the possibility of further extending the RA period in the near future. His support did helped as the Government had later announced the RA extension for another three years from

57 Export Strategies 2. Talent Development Programme (TDP) The Minister recognised the need for continuous training and technology knowledge upgrading in execution of the various manufacturing processes. MPMA briefed the Minister on the disbursement of RM3 million grant over the three years programme ( ) of which the Minister was very impressed with MPMA s accountability, integrity and training achievements. There is an indication of a potential additional funding for the next phase of the TDP.

58 Export Strategies MPMA will revisit the TDP and will draft Phase II of the programme for submission to the Minister for consideration for additional funding. The Focus Group has requested MPMA to prepare the Key Performance Index (KPI) for the Plastics Industry for and the Proposed Action Plans to Achieve the Set KPI

59 Export Strategies On 5 February 2016, MPMA has proposed the following: 1. Assist companies to be suppliers to global MNCs Plastics companies find it difficult to sell directly or be suppliers to global MNCs. In this respect, MPMA proposes that MATRADE assist plastics companies to supply to MNCs as well as become 2nd Tier Suppliers to global MNC 1st Tier Suppliers.

60 Export Strategies In this manner, companies can be part of the global supply chain for MNCs and this would provide the opportunity for company to move up the value chain and increase their exports. MPMA proposed to MATRADE to assist plastic automotive parts manufacturers to become suppliers to these global MNC 1st Tier Suppliers, and to assist other plastics companies to become suppliers for the MNCs in the E&E and food manufacturing industries.

61 Export Strategies 2. Technology acquisitions or technology transfer platforms Companies are continuously sourcing for advanced technologies which could contribute to the increase in output, reduce costs and improve productivity as to remain globally competitive. Companies are aware of these technologies but find it difficult to acquire them, or have joint venture with the technology provider as part of a technology transfer project. MPMA proposed to MATRADE to assist companies in this area of technology acquisition or technology transfer. The plastics companies would identify the potential technology provider so that MATRADE will be able to bring the parties together.

62 Export Strategies 3. Organise more Specialised Marketing Missions or Trade Missions for the plastics sector MPMA proposed to MATRADE to organise more marketing or trade missions for the plastics industry. The recommended countries for MATRADE s consideration are: Australia and New Zealand, Brazil, major EU countries including England, France, Germany and Italy, Cambodia, Indonesia, Myanmar, Vietnam and USA.

63 Export Strategies 4. Increase the quantum of Market Development Grant (MDG) The current ceiling for SMEs is RM200,000 since the commencement of MDG in In view of the increases in various costs and the weakening of the ringgit, MPMA proposes that the ceiling of MDG be increased to RM500,000.

64 Export Strategies 5. Government rebates for companies exploring new markets MPMA proposes that the Government provides rebates in the form of tax incentives for companies exploring new markets at the initial or early stages of market development, similar to the rebates provided by the Chinese Government to their companies.

65 Export Strategies 6. Export promotion activities/facilities in overseas MATRADE to assist the industry by providing the following: Arrangement for exhibits at customer s place, similar to the arrangement organised by KOTRA between the Korean auto parts suppliers and Ford Motor.

66 Export Strategies Incubator office space, either at MATRADE offices overseas or in strategic overseas locations for SMEs to utilise for marketing activities. Networking sessions, preferably with mini exhibitions, for companies to meet overseas customers at MATRADE overseas offices on Malaysian Embassies.

67 Environment Advocacy With increasing State Governments wanting to ban polystyrene (PS) and plastic bags usage, the need to educate and re-set the mind-set of the public is pertinent that PS and plastic bags are not the culprit to environment deterioration but littering and waste management is the cause. MPMA will also seek the good office of the Minister for a tutorial session on Advocacy with the relevant Government Authority.

68 Environment The first advocacy session was successfully held on 1 December 2015 with YB Datuk Seri Wan Junaidi, Tuanku Jaafar, Minister of Natural Resources and Environment (MNRE).

69 Environment MPMA had compiled the following list of Ministers for YB Dato' Sri Abdul Wahid Omar s office to arrange the advocacy sessions: 1. Minister of Local Government and Housing (deal with Solid Waste) 2. Minister of Domestic Trade and Consumerism (deals with supermarkets) 3. Green Technology 4. Minister of Science, Technology and Information 5. Minister of Education 6. Minister of Higher Education 7. Minister of Health

70 Petrochemicals Focus Group Meeting on 15 October 2015

71 Tutorial Session on 16 November 2015

72 Environment

73

74

75 MPMA s responses through media

76 Litter Free Ramadan 2015 View our video on YouTube:

77

78

79 News Coverage China Press Daily

80

81 Litter Free Thaipusam 2016

82

83 News Coverage Pre-campaign The Malaysian Times The Star Bernama

84 News Coverage Pre-campaign Tamil Nesan China Press

85 News Coverage Post-campaign The Malaysian Times

86 Thank You