FMM PRESS STATEMENT: FMM Welcomes MITI’s Decision to Defer 80:20 Employment Ratio Implementation
Head Office, KL
Kuala Lumpur, December 17, 2024 – The Federation of Malaysian Manufacturers (FMM) commends the Ministry of Investment Trade and Industry (MITI) for its pragmatic decision to defer the enforcement of the 80:20 local-to-foreign worker employment ratio for the manufacturing sector until the implementation of the Multi-Tier Levy Mechanism (MTLM).
This decision reflects a thoughtful approach to addressing the realities faced by the industry, particularly as the manufacturing sector continues to grapple with labour shortages and a mismatch in skillsets between available local workers and the requirements of industry roles. The deferment is both practical and timely, ensuring continuity in operations and protecting Malaysia’s global competitiveness while providing industries with a transition period to prepare for the structural changes required.
The 80:20 policy, while aiming to reduce reliance on foreign workers, presents significant challenges for manufacturers in labour-intensive and low-skilled sectors, where local participation remains limited despite efforts to improve wages and benefits. The deferment allows the industry to adopt long-term strategies such as increasing automation, modernising production processes, and investing in the upskilling and reskilling of local workers to meet the demands of new, higher-value roles.
The MTLM, once implemented, will offer a structured and demand-driven approach to labour management, with tiered levies incentivising industries to reduce dependency on foreign labour while enabling companies to hire based on operational needs. This will ensure a gradual and sustainable transition toward a more balanced workforce model. In this regard, FMM reiterates its call for the early release of details on the MTLM implementation. Ideally, the details should be announced six months in advance of implementation to give industries sufficient time to adapt to the upcoming changes, particularly since the implementation will have cost implications and require adjustments to budgets and business operations.
Concurrently, FMM is actively collaborating with higher education institutions and Technical and Vocational Education and Training (TVET) providers to align skills development programmes with evolving industry requirements, with a particular emphasis on emerging areas such as smart and green manufacturing. This proactive approach ensures that the Malaysian workforce is equipped with future-ready skills to meet the demands of a rapidly transforming industrial landscape. Furthermore, FMM has been entrusted to lead the Government-Industry TVET Coordination Body (GITC), a critical platform to enhance the coordination and effectiveness of TVET initiatives in preparing Malaysia's workforce for Industry 4.0 transformations. These strategic efforts, coupled with the deferment, provide industries with the much-needed time, resources, and framework to adapt seamlessly, while simultaneously advancing Malaysia’s overarching goals of workforce localisation, innovation-driven growth, and global competitiveness.
FMM remains committed to supporting the government’s vision and fostering a collaborative ecosystem that benefits the industries, the Malaysian workforce and the overall economy.
DOWNLOAD FMM PRESS STATEMENT
Tan Sri Dato’ Soh Thian Lai
President, Federation of Malaysian Manufacturers
FMM Advocates Transparency, Integrity, Accountability and No Corruption
About FMM
The Federation of Malaysian Manufacturers (FMM) has been the voice of the Malaysian manufacturing sector since 1968. Representing over 12,700 member companies (4,000 direct and 8,700 indirect) from the manufacturing supply chain, FMM is actively engaged with government and its key agencies at Federal, State and local levels. FMM is also well-linked with international organisations, Malaysian businesses and civil society. Apart from benefitting from FMM’s advocacy, FMM members enjoy value-add services, including training, business networking and trade opportunities as well as regular information updates.
Media Enquiries
Han Mong Ying, Senior Manager, Corporate Affairs Tel: 03-6286 7200 Email: [email protected]
This decision reflects a thoughtful approach to addressing the realities faced by the industry, particularly as the manufacturing sector continues to grapple with labour shortages and a mismatch in skillsets between available local workers and the requirements of industry roles. The deferment is both practical and timely, ensuring continuity in operations and protecting Malaysia’s global competitiveness while providing industries with a transition period to prepare for the structural changes required.
The 80:20 policy, while aiming to reduce reliance on foreign workers, presents significant challenges for manufacturers in labour-intensive and low-skilled sectors, where local participation remains limited despite efforts to improve wages and benefits. The deferment allows the industry to adopt long-term strategies such as increasing automation, modernising production processes, and investing in the upskilling and reskilling of local workers to meet the demands of new, higher-value roles.
The MTLM, once implemented, will offer a structured and demand-driven approach to labour management, with tiered levies incentivising industries to reduce dependency on foreign labour while enabling companies to hire based on operational needs. This will ensure a gradual and sustainable transition toward a more balanced workforce model. In this regard, FMM reiterates its call for the early release of details on the MTLM implementation. Ideally, the details should be announced six months in advance of implementation to give industries sufficient time to adapt to the upcoming changes, particularly since the implementation will have cost implications and require adjustments to budgets and business operations.
Concurrently, FMM is actively collaborating with higher education institutions and Technical and Vocational Education and Training (TVET) providers to align skills development programmes with evolving industry requirements, with a particular emphasis on emerging areas such as smart and green manufacturing. This proactive approach ensures that the Malaysian workforce is equipped with future-ready skills to meet the demands of a rapidly transforming industrial landscape. Furthermore, FMM has been entrusted to lead the Government-Industry TVET Coordination Body (GITC), a critical platform to enhance the coordination and effectiveness of TVET initiatives in preparing Malaysia's workforce for Industry 4.0 transformations. These strategic efforts, coupled with the deferment, provide industries with the much-needed time, resources, and framework to adapt seamlessly, while simultaneously advancing Malaysia’s overarching goals of workforce localisation, innovation-driven growth, and global competitiveness.
FMM remains committed to supporting the government’s vision and fostering a collaborative ecosystem that benefits the industries, the Malaysian workforce and the overall economy.
DOWNLOAD FMM PRESS STATEMENT
Tan Sri Dato’ Soh Thian Lai
President, Federation of Malaysian Manufacturers
FMM Advocates Transparency, Integrity, Accountability and No Corruption
About FMM
The Federation of Malaysian Manufacturers (FMM) has been the voice of the Malaysian manufacturing sector since 1968. Representing over 12,700 member companies (4,000 direct and 8,700 indirect) from the manufacturing supply chain, FMM is actively engaged with government and its key agencies at Federal, State and local levels. FMM is also well-linked with international organisations, Malaysian businesses and civil society. Apart from benefitting from FMM’s advocacy, FMM members enjoy value-add services, including training, business networking and trade opportunities as well as regular information updates.
Media Enquiries
Han Mong Ying, Senior Manager, Corporate Affairs Tel: 03-6286 7200 Email: [email protected]
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