FMM Urges KESUMA to Roll Out Multi-Tier Levy Mechanism Amid Shift to Centralised Foreign Worker System

KUALA LUMPUR, July 7 — The Federation of Malaysian Manufacturers (FMM) has formally urged the Ministry of Human Resources (KESUMA) to secure a seamless operational transition to the newly centralised foreign worker management system, while leveraging the unified platform to immediately deploy the long-awaited Multi-Tier Levy Mechanism (MTLM).

FMM President Jacob Lee Chor Kok stated that this structural transition must be strictly reinforced by clear operational guidelines, robust system processing capacities capable of handling high application volumes, and continuous strategic engagement with industry associations to actively mitigate the risk of new bureaucratic bottlenecks. He further emphasized that future digital enhancements to the national recruitment ecosystem should build upon, rather than redundantly duplicate, the newly consolidated Foreign Workers Centralised Management System (FWCMS)/eQuota single-window platform.

According to Lee, the successful consolidation of foreign worker quota processing exclusively under KESUMA presents the state with an ideal institutional window to operationalise the MTLM framework, a reform FMM has consistently pressured the federal government to implement without further delay.

“We have long maintained that MTLM should replace rigid administrative caps and sectoral ratios with a structured, demand-driven approach, allowing companies to hire based on genuine operational need, with tiered levies calibrated to incentivise automation and reduce dependency on foreign labour,” Lee said in an official statement released today.

Under the specific structural blueprint proposed by FMM, manufacturing companies maintaining a foreign workforce threshold of no more than 10 to 15 per cent should be considered for preferential fiscal levy rates, potentially sliding below the baseline RM1,850 rate currently enforced. Conversely, firms exhibiting a higher structural dependency would pay progressively elevated levies calculated under a transparent, standardized formula with adequate advance notice provided to businesses.

The FMM president argued that the incoming mechanism must practically recognize that workforce transformation cannot be applied uniformly across all industrial segments, particularly within highly competitive, export-oriented manufacturing sectors where operational and semi-skilled personnel remain structurally essential.

“MTLM should serve as an economic and industrial transition tool rather than a restrictive labour access policy, with levy proceeds channelled into automation, workforce development and productivity support, particularly for small and medium enterprises (SMEs),” Lee explained, outlining a self-sustaining funding loop for automation.

The national administrative restructuring follows a critical July 1 Cabinet decision which decreed that the One-Stop Centre (OSC) for foreign worker management would be placed fully and exclusively under KESUMA’s purview, taking official effect on July 6. Under this newly instituted workflow, all pending and future foreign worker quota applications must be submitted digitally via the eQuota module of the FWCMS, effectively discontinuing all legacy, manual case-by-case processing practices.

Welcoming the executive consolidation, FMM lauded the move as a long-awaited regulatory reform engineered to streamline Malaysia’s foreign worker recruitment pipeline, effectively rectifying longstanding commercial grievances regarding fragmented and lengthy approval procedures across multiple overlapping state agencies. The federation reaffirmed its commitment to maintain a close, constructive working relationship with KESUMA and relevant enforcement bodies to ensure the single-window reform is executed effectively while safeguarding manufacturers’ access to essential human capital.

-NMT