LOCAL trade bodies are appealing for the current Foreign Workers Transformation Approach (FWTA) renewal fee to remain unchanged or for the proposed hike to be deferred.
Sarawak Manufacturers Association (SMA) secretarygeneral Stephen Ang said the jump in FWTA-related fees from RM904 to RM1,854 would place additional strain on labour-intensive industries already dealing with mounting business costs.
“The manufacturing sector, especially SMEs, continues to face significant operational challenges.
“Businesses are managing rising production costs, increasing logistics and shipping expenses, compliance costs, utility adjustments, minimum wage implementation, and uncertainties in the global economic environment,” he said.
Ang said manufacturers were becoming increasingly concerned about the long-term impact of rising operating costs, especially on SMEs and labour-intensive sectors.
“We certainly hope the situation will not reach a stage where companies are forced to scale down operations, defer expansion plans, relocate investments elsewhere or in more difficult cases, cease operations altogether.
“Such outcomes would not benefit the broader economy, employment opportunities, or the long-term industrial development of Sarawak,” he said.
While businesses understood the government’s efforts to improve labour management under the FWTA framework, he said many companies were still recovering and adjusting to broader economic pressures.
“A more gradual implementation or temporary deferment would provide companies with muchneeded breathing space to stabilise operations and plan ahead more effectively,” he said.
Ang noted that industries such as manufacturing, timber processing, food production, logistics and downstream sectors continued to face labour shortages despite ongoing recruitment efforts for local workers.
“SMA members remain committed to prioritising employment opportunities for Sarawakians and many companies continue investing in automation, skills training, and productivity enhancement initiatives.
“However, certain operational roles continue to face difficulties in attracting sufficient local manpower, making foreign workers still necessary to support business continuity,” he explained.
He said maintaining a competitive business environment remained critical as Sarawak industries competed regionally for investments and export opportunities.
“We hope that continued engagement between the government and industry stakeholders will help ensure that policy implementation remains balanced and practical while supporting both economic growth and workforce sustainability,” he said.
Ang added that manufacturers supported the government’s broader plans to improve labour management and streamline the foreign worker ecosystem.
“Manufacturers understand and support the government’s aspiration to improve labour management and enhance the overall efficiency of the foreign worker ecosystem through digitalisation and better coordination,” he said.
Sarawak Business Federation (SBF) secretary-general Datuk Jonathan Chai said rising foreign worker-related costs were becoming a wider concern across industries. He said businesses were not only worried about the FWTA fee increase itself, but also the cumulative impact of rising operating costs.
“The proposed increase in the renewal fee for foreign worker permits from RM904 to RM1,484 from June 1, 2026, and subsequently to RM1,854 from Jan 1, 2027, came at a time when businesses were already dealing with rising fuel costs, logistics expenses, compliance requirements, minimum wage adjustments and the proposed EPF contributions for foreign workers.
“Taken together, these developments are placing significant strain on operating margins and overall sustainability,” he told Sarawak Tribune.
Chai said labour-intensive sectors such as construction, manufacturing, plantations, retail and services would be among the hardest hit because they remained heavily dependent on foreign workers.
“The reliance was largely due to limited local participation in 3D jobs, referring to dirty, difficult and dangerous work.
“In these sectors, cost increases cannot be easily absorbed or substituted, making them particularly vulnerable,” he said.
He added that SMEs were especially exposed because they operated with tighter margins and less financial flexibility.
“In practical terms, higher renewal fees will inevitably influence business behaviour.
“Employers may be forced to delay expansion plans, reduce hiring, or re-evaluate operational scale.
“In some cases, the increased costs will be passed on, contributing to higher prices for goods and services and adding to inflationary pressures,” he said.
Chai also questioned whether the FWTA system itself was efficient enough to justify the higher costs imposed on employers.
“If the system imposes additional administrative burdens, delays, or complexity, then the cost to businesses goes beyond financial impact and extends into productivity losses and operational inefficiencies.
“Both the cost structure and system design must remain fair, transparent and outcome-driven,” he said.
He said any outsourcing or software-related arrangements should be structured carefully to prevent additional long-term cost burdens on businesses.
“Otherwise, there is a risk of embedding structural costs within the system that will ultimately be borne by businesses and passed on to consumers,” he said.
Sarawak Chamber of Commerce and Industry (SCCI) president Datuk Philip Ting Ding Ing said SMEs, which made up 99 per cent of businesses in Sarawak, were already struggling in the current economic climate.
“SMEs generally had no pricing power and found it difficult to pass costs on,” he said.
Ting said the all-in foreign worker fees of about RM2,000 per worker were expensive and increased upfront business costs.
“The recently imposed fees of about RM2,000 all-in per worker are expensive and added to upfront business costs,” he said.
He added that delays in work permit approvals were also affecting operations and increasing costs for employers.
“There needs to be better coordination between the various government departments involved in the matter,” he said.
Ting said plantations remained the most affected sector, followed by construction and manufacturing, while agriculture was also facing growing pressure.
“All these lead to a snowballing of costs across the whole economy and ultimately surfacing as inflation.
“Reduced hiring of workers both domestic and foreign will ultimately follow,” he said.
Chai, meanwhile, called for the fee increase to be reviewed through a more consultative and phased approach.
“A deferment, combined with a more consultative and phased implementation approach, would allow for better alignment between policy objectives and business realities,” he said.
He added that sector-based adjustments or transitional support measures should also be considered for labour-dependent industries.
“Ultimately, policy success must be measured not only by its intent, but by its impact on the ground.
“It is important that implementation remains practical, proportionate and supportive of long-term economic growth and competitiveness in Sarawak,” he said.
