Tuesday, April 21, 2009

Look back in to Malaysia unjust policy on levy deduction

Seem it has been there long time ago ..


“Except t for domestic workers,, all other migrant workers pay a levy of about RM1,200 per anum, more than the amount many Malaysians pay in taxes. In addition, workers in the plantation, construction and manufacturing sectors are made to pay the premium of the Foreign Workers Compensation Scheme (FWCS), an insurance that covers them in case of accidents and work related injuries but which excludes invalidity pensions for work related disabilities. In all, migrant workers pay about the following amounts per anum towards the costs given below

Levy : RM 1,200

Visa (PLKS) : RM 60

Multiple Entry Visa : RM 15

Processing Fee : RM 50

Foreign Workers Compensation Scheme: RM 96

Annual Check Up Fomema : RM 190

Total: RM 1,611

In almost all cases, employers advance the above costs but subsequently deduct it from the wages of

the migrant worker. In some cases, the coverage by the employer is partial

( Hj Shamsuddin Bardan, Malaysian Employers Federation, Foreign Workers in Malaysia – Opportunities and Constraints, MTUC/ILO Regional Workshop on Migrant Workers in Malaysia, 18-19 April 2005)

From http://www.caramasia.org/news/presentations/roundtable.pdf

From Aliran ..2003

Migrant Labour: Aliran’s Facts “Wrong”

Aliran seems to be attacking the Myanmar Employment Agency without having more concrete evidence.

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migrantshousing (7K)

The Burmese migrant workers' dilapidated quarters in Butterworth where they are crammed seven to a room

It is commendable to see Aliran publicise the plight of the seven Myanmar workers deported by their Malaysian employer in Butterworth. However, certain facts revealed in your statement concerning the wages of migrant workers are wrong:

“When they arrived in Malaysia, they were shocked to find out that their take-home wages in some cases fell below RM100/month. Others have received take-home wages in the region of RM100 to RM200. This was due to a host of deductions from the workers’ salaries… A huge chunk - 50 percent - is deducted to repay loans taken to finance their trip to Malaysia and pay off agents’ fees and air-fare. In addition, there are other deductions: 10 percent supposedly for Burma’s income tax; and deductions for foreign workers’ levies.”

I would like to clarify that the 50% deduction from their salary is not used only to repay loans taken to finance their trip to Malaysia and pay off agents’ fees. If that is the case the sum will be too big and is not justifiable. In actual fact, at the beginning, part of this 50% deduction will be given to their families as monthly family remittance. Once the loan is paid, the full sum of the 50% deduction will go to their families in Myanmar. This is done through the Burmese Embassy in Kuala Lumpur. With this information in mind, it is therefore wrong to imply that the workers received only RM100 or RM200 as take home wages.

The 10% Income Tax is done in accordance with Burma’s labour law. The Malaysian Government’s levy deductible is RM100 per month.

Furthermore, both deductions are calculated based on their basic salary, which is RM18 x 26 days = RM468 per month. If they have many hours of overtime, they should have more money in their pockets while in Malaysia.

This system of deduction has its merits in that it ensures the repatriation of their hard-earned money back to Myanmar. But it has also posed some problems for the workers once they do not work overtime and their salary falls short of the RM700 promised.

Aliran seems to be attacking the Myanmar Employment Agency without having more concrete evidence. This particular Agency involved in this garment factory is state-owned. As far as I know, its main concern is not to ride on the back of workers to make as much money as possible like certain private agencies. Thus far, Burma is the only country that still gives full financial loans to their workers to work in Malaysia. Workers from other source countries like Vietnam have to find their own finance. The Myanmar Employment Agency concerned actually finds itself in financial difficulty for not being able to collect enough funds to send new workers to Malaysia. It is changing this system of financing. The percentage of the workers’ monthly “Family Remittance” too will be reduced from 50% to 30%.

Therefore, in this particular case, it is wrong to say that the “Employment Agency had enticed the workers to come to work in Malaysia” on false salary promises. The famous RM700 per month salary is actually a guarantee obtained by the Myanmar agency for their workers after negotiating with the Malaysian employer, and is stated in their employment contracts. It is often the fault of the employers who cannot live up to their engagement, due to various reasons - one of the main reasons for subsequent industrial disputes. Of course, the inability to speak each other’s language is also a main culprit.

So much for the clarification. Nevertheless, it’s true that under the present system the balance of power is tilted in favour of the employer. For example, the workers can be reprimanded and sent back to their country of origin immediately without adequate safeguards or compensation, even though the seed of the labour conflict could be sown by employers who do not respect the Malaysian Labour law and the employment contracts. Much has to be done by all parties, including relevant government authorities, to promote better labour relations between the Malaysian management and the foreign workers. This begins with the provision of good information and public consciousness.

That’s what motivates me to write to participate in this debate.

Chia Yong Tai
6 June 2003

Aliran Responds

Deductions Galore

Someone’s getting rich and it’s not the migrant workers…

The 50 Percent Deduction (about RM230/month)

According to the workers we interviewed (at Ban Guan Manufacturing (M) Sdn Bhd), the 50 percent deduction does not go to the migrant workers’ families until the loans taken to finance the trip to Malaysia are fully repaid. It takes about 11 months’ deductions of about RM230/month before the loan of about RM2,500 is settled.

According to the workers, the loan taken in Burma is used to finance the following:

Air Fare


Agent (incl. visa)


Advance to workers




This figure is deducted from the workers’ salaries over about 11 months (about RM230/month) and according to the workers the whole RM230 is used to pay off the loan. According to them, their families do not receive any money until the loan is settled.

Additional RM110 Monthly Deduction For Workers’ Levies

In addition, the workers say they also have to bear the following expenses including foreign workers’ levies imposed by Malaysia:



Malaysian Levy




Processing Fee




This amount is paid over 12 months via a deduction of about RM110/month.

A further 10 Percent Deduction For Income Tax Imposed By Burma

To add salt to injury, there was yet another deduction this time for income tax payable to the Burmese government. It is amazing how the workers, despite their already low take-home salaries, are expected to pay monthly income tax to the Burmese Government on top of the US$665 they had already stumped out before leaving Burma.

Deduction For Security Guard

These was a monthly RM5 deduction for an old company security guard who was supposed to keep an eye on the workers' belongings while they were at work. There is no provision under the law allowing the employer to make such a deduction.

The Worthless Guarantee Of RM700 Minimum Wage (basic plus overtime)

This guarantee is worthless as there appears to be nothing to compel the Malaysian employers to respect the employment contract signed in Burma. This allows unscruplous employers to take advantage of this loophole and get off scot-free knowing that they cannot be taken to task.

The local authorities tend to say they cannot act because this matter is not in their jurisdiction as the contract was signed in Burma. It appears that the Malaysian authorities, Malaysian employers and the recruitment agents are all to be blamed because all of them probably know that there is no way the RM700 wage can be enforced here in Malaysia. How can the Myanmar Employment Agency give an assurance to the workers they will be paid RM700 in Malaysia when they jolly well know that there is nothing they can do to compel Malaysian employers to honour that assurance?

In that sense, the workers were enticed with the so-called RM700 guarantee as all the other parties knew there was nothing to ensure compliance in Malaysia.

This is the crux of the problem. If the workers get the RM700 they were guaranteed, then they can just about survive in Malaysia with all those heavy deductions.

But if they are denied the overtime promised, the migrant workers are left with a pittance to live on after all the deductions. And there is nothing anyone here can do to compel the employers to observe the so-called guarantee made in Burma.

Questions, Questions…

It also raises fresh questions as to why the workers have to absorb these heavy expenses (remember the amount is all the more oppressive considering the income levels in Burma), when it is the employers (and the recruitment agents!) who benefit from the trafficking of cheap migrant labour. Why can’t the employer pay for these expenses? Why does it cost US$665 for a migrant worker to leave Burma when the airfare costs only US$185 and the small cash advance to the workers is US$30? In whose pockets does the remaining US$450 per migrant worker end up?

How was the company able to make these deductions without the approval of the Malaysian Labour Department?

And what is the Labour Department's policy in allowing companies to make various deductions. Does it warn employers to ensure that workers get a decent take-home pay? Surely it's about time for the Department to insist on a minimum take-home pay for migrant workers.

These are the questions for which we would like some answers.

P.S. In a landmark decision on 20 June 2003, the High Court in Penang ruled in favour of 52 Indian migrant workers who were similarly duped with false promises of a RM750 wage when they were recruited for employment in Malaysia.

When they arrived in Malaysia, they found that the employer would only pay them RM350. But what they actually received was less than this after deductions for levies etc.

Let us hope that this Court decision will deter other Malaysian employers and their recruitment agents from enticing migrant workers with similar fraudulent promises.

With input from Joachim Xavier, migrants desk officer

Saturday, April 4, 2009

Where is the copy of Malaysian‘s policy to allow employer deduct the levy from the employee?

Where is the copy of Malaysian‘s policy to allow employer deduct the levy from the employee?

“Under the new policy which came into effect yesterday, employers in all sectors will now have to pay the levy, following the revocation of the earlier policy which allowed them to deduct the levy from the monthly wages of their employees”
The Malaysian Federation of Employers (MEF) had described the new policy as unfair..

It is fair to deduct the levy from workers who are already facing under payment and all kinds of unlawful deduction ?
The levy policy is really facilitated condition of forced labour/ debt bondage among migrant workers, which should be serious concerns for relevant stakeholders especially the trade unionist who should advocated for rights of every worker including migrant workers.

April 4, 2009
Beef Up Enforcement On Foreign Workers Levy, Says MTUC
PUTRAJAYA, April 2 (Bernama)- The Malaysian Trades Union Congress (MTUC) today called on the government to beef up the enforcement unit of the Manpower Department to ensure the successful implementation of its new policy on levy for foreign workers.
Its president, Syed Shahir Syed Mohamud, said the department had only about 500 officers now and this was not enough to keep tabs on the thousands of employers throughout the country.
“We do not expect them to visit all employers, as it would be impossible, but at least they should do a systematic random check so that the policy is adhered to,” he told Bernama.
Under the new policy which came into effect yesterday, employers in all sectors will now have to pay the levy, following the revocation of the earlier policy which allowed them to deduct the levy from the monthly wages of their employees.
This means that from this month onwards employers would have to fork out the levy even for their existing workers, thus increasing their operational costs.
The Malaysian Federation of Employers (MEF) had described the new policy as unfair because it was implemented in mid-stream with little notice from the government.
MEF executive director Shamsuddin Bardan said it was understandable for new recruits, but to extend the policy to existing workers was not proper and and would upset the budget and planning of companies, particularly those with thousands of foreign workers.
Meanwhile, Manpower Department Director-General Datuk Ismail Abdul Rahim gave an assurance that the department would carry out effective implementation of the new policy with its existing staff.
“The staff have been told to carry out thorough checks and take firm action against employers who refuse to accept the new directive,” he said.
Those found guilty of flouting the regulations could be fined up to RM10,000.
He said the government had also doubled the levy for workers in the manufacturing and services sectors from RM1,800 to RM 3,600 effective yesterday.