addressing issues faced by the industry

Roadshow 2016

ADDRESSING ISSUES

FACED BY THE

INDUSTRY

Contents

Labour and Foreign Workers Issues

Reinvestment Allowance

Energy Issues

Export Strategies

Caring for the Environment

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).


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).

Labour and Foreign Workers1. 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. VDR application for security guards;

iii. Extension of VDR approval letter.

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.


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.



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.


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.


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.


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.


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.


With the full implementation of BioMedical and

VDR modules under the FWCMS, the

Immigration Department closed all manual

counters permanently on 1 July 2015. The

counter service will only be available for

"serious cases".


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.

Meeting at ACCCIM


2. 100% 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.

Labour and Foreign Workers2. 100% 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.


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)


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.


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 2016 - 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


16 February 2016 - 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 2106.

A joint meeting was organised by MEF and held on 22

Feb 2106.

Press Conference at ACCCIM on

2 February 2016

Labour and Foreign Workers3. 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

2015. 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.


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.


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.


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.


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.


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.


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.

Labour and Foreign Workers4. 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).


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.


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.


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.


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.


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.

Labour and Foreign Workers5. 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.


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.


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.


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.

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.

Chronology of Events on Reinvestment

AllowanceDates 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.


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.


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 2018. 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.

Meeting with Minister of Finance II on

23 September 2015

Energy Issue

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 2017.

The gradual phasing out of the Special Industrial Tariff (SIT)

by 2017, has been extended to 2020.

5 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.

Energy Issues


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.

Energy Issues


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 2017.

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.

Energy Issues


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.

Energy Issues


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

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 2017. This is

because the Tariff D users are currently not

entitled for any off-peak rate.

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.

Export Strategies

The 1st meeting was held on 15 October 2015.

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 2015. MPMA presented the three

plastics manufacturing processes, i.e. Injection

Moulding, Blow Moulding and Film Extrusion

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.

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.

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 2016-2018.

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

(2013-15) 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.

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 2016-2020 and the Proposed Action

Plans to Achieve the Set KPI

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.

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.

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.

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.

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 2002. 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.

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.

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.

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.

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.

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).

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

Petrochemicals Focus Group Meeting

on 15 October 2015

Tutorial Session on 16 November 2015

Environment

MPMA’s responses through media

Litter Free Ramadan 2015

View our video on YouTube:

https://youtu.be/CHPQ1VvHeUg

https://youtu.be/CHPQ1VvHeUg

News Coverage

China Press Daily

Litter Free Thaipusam 2016

News Coverage – Pre-campaign

Bernama

The Malaysian Times

The Star

News Coverage – Pre-campaign

Tamil Nesan

China Press

News Coverage – Post-campaign

The Malaysian Times

Thank You

addressing issues faced by the industry

Documents