Majlis Pengawasan Syariah Etiqa Takaful

Thursday, March 24, 2011

Foreign workers: Insurance Scheme Unfair To Manufacturer

THE Federation of Malaysian Manufacturers (FMM) is strongly of the view that the government should abolish or at least defer the mandatory health insurance scheme for foreign workers.

FMM had submitted the manufacturing industry's concerns over the implementation of the scheme for foreign workers.

The policy, which came into force on Jan 1, has several issues that need to be clarified. Employers also face difficulties in complying with some of the provisions. As an interim measure to rectify anomalies, FMM has drawn up a list of recommendations, including that:

The government should not need to appoint approved insurance service providers, set the premium rate or stipulate the class of treatment for the scheme. The government should focus on the minimum policy coverage and the type of treatment to be covered.

The government, specifically the Health Ministry, should make public the criteria and process used to select and approve the 17 insurance service providers.

Employers should be allowed to negotiate with insurance companies of their choice. Employers already providing medical benefits to workers should be exempted from purchasing separate medical insurance cover from "approved" insurance companies.

As a case in point, FMM said one of its members, with 6,000 foreign workers, is self-insuring medical costs for its workers at a cost of RM150,000 per year, in contrast to having to pay fees of nearly RM720,000 per year under the compulsory insurance scheme.

The ministry had tried to justify the scheme by saying that government hospitals had accumulated large unpaid bills for services rendered to foreign workers. This may not necessarily be true.

The ministry should carry out a thorough analysis of the data on defaulters.

It could be that the main culprits were "illegal foreign workers, the self-employed, those employed by sub-contracting agencies or transient workers in the construction and logging sectors".

The new scheme is effectively, therefore, a subsidy by registered legal foreign workers to illegal workers.

The scheme is unfair to the manufacturing sector as most employers in the sector have already lodged a bank guarantee with the ministry.

It is inaccurate to assume that the scheme has the support of the affected stakeholders and could continue to be implemented because 110,000 foreign workers have reportedly purchased the insurance.

These stakeholders are likely to have been compelled to proceed with the purchase because they needed to extend the work permits of their foreign workers.

The FMM statement also said these and other issues could have been minimised through a more extensive consultation with all relevant stakeholders. There was no prior consultation with FMM.



Federation of Malaysian Manufacturers, Kuala Lumpur

1 comment:

Nur Amin Abdullah said...

This issue is concerned with the increase in insurance premiums for migrant workers from RM90 to RM120 minimum set by the government beginning January 1, 2011. This matter has been reviewed by the relevant ministries on the issue of medical costs incurred by hospitals amounting to over RM400 million for foreign workers in this country. Government had decided to raise the premium to increase the rate of RM120 per year for insurance cover to migrant workers in the country. In principle, there are those who disagree with this move, particularly the employer because of the insurance costs to be incurred by them will increase by 25%. For starters the employer may be able to bear the cost of the premium, together with their employees. For example, the employer pays for the cost of the old premium and the remaining RM90 borne by the workers themselves. It would reduce the cost compared to paying all the costs of insurance premiums, but only employees who get benefits.