Issues and Challenges in Plastic Industry
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Transcript of Issues and Challenges in Plastic Industry
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Issues and Challenges Facing
the Plastics Industry
Contents Minimum Wage Issues
MITI Dialogue 2013
Bank Negara Dialogue 2012
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Chronology of Events on
Minimum WageDates Description
Aug Sep 2011 Survey on the min wage paid by MPMA members was conducted
Dec 2011 Proposal on min wage was submitted to the National Wages
Consultative Council (NWCC) through MEF but it was rejected
MPMAs proposalMin wage ofRM600 forless economically developed areas like
Kedah, Kelantan, etc and East Malaysia
Min wage ofRM650 foreconomically developed areas like KL,
Selangor, Penang and Johor
9 Feb 2012 MPMA met with MEF and submitted a revised proposal. MPMAs
proposal was again rejected by NWCC
MPMAs revised proposal
Min wage ofRM700 forless economically developed areas
Min wage ofRM750 foreconomically developed areas
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Chronology of Events on
Minimum WageDates Description
17 Feb 2012 MPMA was concerned when the Government announced that a min
wage level of between RM800 and RM1,000 would be submitted for
Cabinets approval early March
27 Feb 2012 MPMA initiated a meeting with trade organisations
6 Mac 2012 A Joint Press Conference was held with 16 trade associations and 36representatives from 21 media companies. 43 articles and 12
mentions on television and radio were published/aired
Highlights of the Joint Press Conference
A sudden and substantial increase in wages will result in closure of
at least 30% of the small and medium sized plastics companies
10,000-20,000 job losses due to company closures and companies
adjusting to the high wage bill from the national min wage
Urged the Government to consider introducing the min wage policy
in phases over a period of time to give companies and businesses
time to adjust
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Chronology of Events on
Minimum WageDates Description
12 Mac 2012 MPMA sent a letter to the Prime Minister following the Press
Conference, proposing the following:
The definition ofMin Wage should be based on Take
Home Pay which includes Basic Salary + Overtime +Incentives + Allowances + Bonus
An increase in wages must commensurate with an
increase in productivity
The implementation of min wages should be staggered as
sufficient time is required to upgrade the skills of the workers
to improve their productivityMin wage quantum should be differentiated by
geographical locations as well as between rural and urban
areas
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Updates on
Minimum WageDates Description
27 Mac 2012 MPMA received a reply from the Secretary-General, MoHR
stating the following:
The Government had taken note of MPMAs proposals
The Government would considerall or part of the cash
allowances be included into the min wage
30 Apr 2012 Prime Minister announced that a min wage of RM900 would
be implemented for Peninsular and RM800 for East Malaysia.
14 Jun 2012 Government announced that the National Min Wage Act
would be gazetted on 1 July 2012.
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Updates on Minimum WageDates Description
6 Aug 2012 Meeting with the Secretariat of the National Wages Consultative
Council (NWCC) and submitted a written proposal on 17 August
2012 based on the following:
With the current unemployment rate of 3.1%, it is extremely
difficult to employ local workers (LW). As such, the industry isheavily dependent on foreign workers (FW)
Employers have to pay additional RM293-343 per month for
employing every FW, as the costs of levy, amenities and
insurances have to be borne by the employer
LWs do not enjoy such benefits, and are therefore discriminated
Huge outflow of cash being remitted overseasRM 14.4 billion
Min wage policy would have a severe impact on manufacturing
cost, if the basic pay of FW increases to RM900
Closure of companies means that LWs shall be rendered jobless
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Updates on
Minimum WageDates Description
6 Aug 2012 MPMAs appeals
1.The costs of levy, amenities and insurances to be
borne by FW
2.The existing contracts with FW should be allowed tocontinue until the expiry date, the min wage for FW should
be phased in over two years
3.Shift allowance and attendance allowance be allowed to
be computed as part of min wage but the quantum shall not
be fixed
4.Transport allowance and housing allowance be part ofthe computation of min wage
5.Meal allowance should be included in the computation of
min wage
6.Different regions within Peninsular Malaysia and
Sabah/Sarawak be accorded a lower min wage
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Updates on
Minimum WageDates Description
13 Aug 2012 Sent Circular No. 33e/2012
Template which members can use to request for deferral of
the implementation of min wage
15 Aug 2012 MPMA invited various trade associations to brief them on theoutcome of the meeting between MPMA and the NWCC .
Provided them with soft copy of application for them to also
submit to the Govt. Several of which were submitted.
21 Sep 2012 Submitted an appeal to NWCC for a blanket approval to defer
the implementation of min wage for all the 800+ members fora period of one year from 1 January 2013
25 Sep 2012 NWCC issued the Guidelines on min wage implementation in
early September.
Briefing by Labour Officer on min wages Implementation at
MPMA Head Office.
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Updates on
Minimum WageDates Description
10 Nov 2012 Attended a meeting with NWCC, explained the rationale for
the one year deferral
20 Dec 2012 Received notification from NWCC, informing MPMAs appeal
for the one year deferral had been rejected
31 Dec 2012 MPMA issued a press release, expressed its concerns on the
impact of min wage:
Direct labour cost would increase by 30% to 40%
Appealed for a grace period of at least one year for the
implementation of min wage
30 Jan 2013 Cabinet announced that the levy would be borne by the FWs.
However, the new policy would apply to new FWs or when
the existing FWs renew their work permits
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Updates on Minimum WageDates Description
4 Feb 2013 MPMA participated in a dialogue session between the Ministry of
Human Resources (MOHR) and coordinated by the Malaysian
Employers Federation (MEF), together with the SMI Association,
Furniture Association and a few other associations.
Employer associations expressed their concerns on the impact
of min wages on businessesPointed out that there is growing discontentment by LWs
increase of only 3-6% vs 60-70% for FWs. Strikes and protests,
with expectation that there could be more protests after CNY
Requested for the deferral of min wage implementation
Requested that the cost of levy, amenities and insurance for
FWs in included as part of the min wage, or borne by FWs
12 Feb 2013 MPMA sent a proposal comprising the following to NWCC on
steps and measures to be taken by the Government to assist
companies adversely affected by the implementation of min
wage: 10
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Updates on
Minimum WageDates Description
12 Feb 2013 Levy - The Government to consider absorbing the levy
cost for FWs that are currently paid by the employer before
the renewal of the permit, in the following manner:
a)For companies with a low profit margin of less than 3%, the
Government to absorb the FW levy cost in the form of a
direct payment to SMEs
b) For companies with a profit margin of more than 3%, the
Government to absorb the FW levy cost in the form of acorporate tax relief
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Updates on Minimum WageDates Description
12 Feb 2013 The Government to consider providing a tax relief for costs
incurred on overtime, accommodation and transportation
for FWs
HRDF and SOCSO - The Government to consider suspension
of HRDF contributions and that SOCSO contribution be paid
for by the Govt. Transport and accommodation - The government to assist
the industry by requiring that the FWs bear the cost of
transport and accommodation. To assist the renegotiation of
this provision, it would be necessary to first nullify the existing
contract and be replaced by new work contract. Proposal is to
revoke the work permit with the arrangement that a new workpermit be issued upon a new work contract being signed by
the FWs. The new work contract would set out the min wage
and that the FWs would bear the cost of levy, transport and
accommodation
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Updates on
Minimum WageDates Description
15 Feb 2013 MPMA attended a meeting coordinated by MEF for
selected industry associations
After the meeting, MEF submitted recommendations based
on inputs from MPMA and other associations to theGovernment on strategies to assist companies to mitigate
the high cost of doing business arising from the
implementation of min wages. The following is a summary
of the joint recommendations:
1) Defer the implementation of national min wages by 12
months for all employers to allow more time and flexibilityfor employers to plan and restructure their businesses,
which is necessary given that the current global economic
situation is challenging.
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Minimum WageDates Description
15 Feb 2013 2) Government to allow employers to recover the cost of levy
that have already been paid by deducting the salaries of the
foreign workers beginning on 30 January 2013. The term
levy be replaced by some other appropriate and neutralterm, such as public facilities fees or utilities fees
3) Employers should be allowed to charge a fee for providing
amenities such as accommodation, transport, airfare,
insurance provided to FWs which can be recovered
through the deduction of wages
4) Contributions to HRDF and SOCSO be suspended for a
minimum period ofthree years
5) Enforcement of min wages by Labour Department be
deferred for 24 months beginning January 2013 14
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Updates on
Minimum WageDates Description
20 Feb 2013 Cabinet announced measures to assist employers to mitigate
the impact of minimum wages:
A.For employers which have not implemented minimumwages forFWs:
(i)Employers can submit their application for deferment for
FWs to NWCC Secretariat through association or individually;
(ii) Evaluation based on individual company basis and ifneed be, officers from JTK (Labour Dept.) would be required to
verify documents, and interview unions/workers, at workplace;
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Updates on
Minimum WageDates Description
20 Feb 2013 (iii) Employers applying deferment cannot make deduction
from wages forlevy or accommodation;
(iv) Min wage must be implemented forLWs beginning1 January 2013
B. For employers already implementing min wages forFWs:
(i) Employers can apply to JTK fordeduction of levy and
cost of accommodation for FWs (appropr iate amoun tto be determined by JTK); and
(ii) No further deferment for employers already implementing
min wage
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Updates on
Minimum WageDates Description
22 Feb 2013 MPMA attended a briefing by MOHR on the new measures.
MOHR further informed that the Ministry is working with
relevant Ministries on other incentives package such as:
GrantsDouble tax deduction for extra cost of labour
MPMA expressed our views as follows:
(i)It is unfair for those employers already implementing min
wage be prohibited to apply deferral;
(ii)The deferral, which means only some employers would be
granted, would create issues including strikes, job hopping andunhappiness amongst the FWs and LWs;
(iii)Grants are not suitable as past results had shown that very
few applicants were successful; proposed for the extension
Reinvestment Allowance instead;
(iv)Appealed for a deferment across the board for one year.
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Updates on
Minimum Wage
Dates Description
27 Feb 2013 MPMA and about 20 representatives from various trade
associations were invited for a meeting with the NWCC to
discuss the implementation of min wage.
During the discussion, some NWCC members requested trade
associations to accept the latest decision made by the Cabinet
on 20 Feb 2013. However, associations were of the view that
the deferment must be across the board for all employers.
NWCC emphasized that the above had been made into a law
by the Cabinet, employers must accept it. Trade associationsfelt that since there is no further room for discussion, they
decided not to participate the meeting.
Association representatives had a post-discussion amongst
themselves and decided that the last option is to write an
appeal letter to the Prime Minister to express the difficulties forSMEs to implement min wage for foreign workers. 18
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Updates on
Minimum WageDates Description
28 Feb 2013 The Minimum Wage Implementation Steering Committee
of SMI Association prepared a joint letter to the Prime
Minster requesting for a review on the implementation of
Minimum Wage Policy on Foreign Workers in Malaysiato lessen the burden on the small and medium sized
companies. The Steering Committee was looking
towards collecting 10,000 or more signatures from both
associations and individual companies for support.
MPMA had circulated the letter to all members, about
110 companies had signed the joint letter.
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8 March 2013 - Meeting with MITI Minister
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8 March 2013 - Meeting with Health Minister
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MITI Dialogue, 7 Jan 2013
Issue MPMAs Proposal
1. National
Minimum
wages
1) The costs of levy, amenities and insurances to be borne
by FW
2) The existing contracts with FW should be allowed to
continue until the expiry date, the min wage for FW
should be phased in over two years
MPMA attended the Annual Industry Dialogue with MITI on 7
January 2013 together with 5 other associations from the
chemical and petrochemicals industry. MPMA was the only
association which raised the issue on min wage
Immediately after the dialogue, the MITI Minister called a press
conference and announced that MITI would assist the
employers to reduce the burden arising from the
implementation of min wages, by proposing to the Ministry
of Labour to allow the levy for foreign workers be
included into min wage 22
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MITI Dialogue, 7 Jan 2013Issue MPMAs Proposal
2. Reinvest-
ment
Allowance
The Government to relax the RA claimableperiod by
allowing manufacturing companies to claim on RA on their
reinvestment expenditure with no time limit
3. Electricity
Tariff
1) TNB should extend its off-peak rates to all the plastics
manufacturing companies which are low-voltage users.
MPMA proposed that a 40% discount to be given for off-
peak rate under Tariff D (low-voltage)
2) Off-peak electricity tariffbe extended to coverall day ( ie
including day time) of Saturdays and Sundays forall
categories of TNB users, both in the Tariff D and Tariff E
4. EUs GSP Effective 1 January 2014, Malaysia will no longer be a
beneficiary under the European Commission (EC)s
Generalised Scheme of Preferences (GSP). MPMA suggested
that MITI expedites the Malaysia-EU FTA negotiation process
in order for Malaysia to become competitive in the EU market.23
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Bank Negara Industry Dialogue,
14 June 2012Issue MPMAs Proposal
1. Min Wage Briefed BNM on the various proposals submitted by MPMA
to the Government on min wage issues
Re-emphasised MPMAs stand on min wage issues as per
the letter sent to the PM on 12 March 2012
Explained the possible impact of min wage on SMEs andbusinesses
Expressed MPMAs concerns on the impact of the min wage
2. Reinvest-
mentAllowance
The Government to relax the RA claimableperiod by
allowing manufacturing companies to claim on RA on theirreinvestment expenditure with no time limit
3. MPMAs
TDP
Briefed BNM on MPMAs Talent Development Programme
(TDP), as a long term strategy to increase the productivity of
the workers and hence less dependent on FWs
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