By DayakDaily Team
KUCHING, May 21: Sheda Institute has urged the Sarawak government to review the Foreign Worker Transformation Approach (FWTA), warning that any substantial increase in labour and regulatory compliance costs could place additional pressure on construction and development expenses, ultimately be reflected in the pricing of new housing supply and reduce accessibility for aspiring homebuyers, particularly first-time purchasers.
In a statement today, Sheda Institute said the housing development and construction industry in Sarawak is increasingly concerned over rising compliance and labour costs arising from the implementation of FWTA, which has added further financial strain to an already challenging operating environment.
While acknowledging the State government’s efforts to improve governance, transparency, and digitalisation in foreign worker management, the institute said the FWTA has resulted in significant additional costs and procedural challenges for developers and contractors.
It noted that under the new system introduced earlier this year to replace the previous MSEN framework, employers are now required to bear additional administrative and processing charges of about RM1,854 per worker, excluding Sales and Service Tax (SST).
Industry players noted that these charges are unique to Sarawak and are not imposed in Peninsular Malaysia or Sabah, placing the State’s construction and housing sector at a competitive disadvantage.
“The housing and construction industry remains highly labour-intensive, particularly in civil works, infrastructure, formwork, bricklaying, plastering, roofing, tiling and general construction activities. Despite ongoing efforts to promote mechanisation and Industrialised Building System (IBS) adoption, the sector continues to depend heavily on foreign labour to sustain project timelines and efficiency,” the insitute said.
It added that FWTA has come at a time when other costs are also rising, including the RM1,700 minimum wage policy, higher building material prices, increased utility charges, transportation costs, and the proposed mandatory Employees Provident Fund (EPF) contributions for foreign workers.
“Collectively, these measures have substantially increased development costs and placed tremendous financial strain on developers and contractors, especially those involved in affordable and mid-range housing projects,” the institute said.
Although it acknowledged the objective of streamlining labour management, Sheda Institute said a more practical and phased implementation approach is needed to allow businesses sufficient time to adjust operational planning, manpower requirements and project costing.
Citing data from the National Property Information Centre (NAPIC), the institute noted that about 10,050 housing units worth approximately RM3.6 billion were transacted in Sarawak in 2025, with the median transacted house price at around RM390,000.
“About 68 per cent of these units were priced below RM400,000, showing that most homebuyers in Sarawak still rely on housing within this range,” it said, cautioning that any substantial increase in labour and regulatory compliance costs would place additional pressure on overall construction and development costs, which would likely be passed on to home prices.
The institute also cautioned that rising housing costs would add to the financial burden already faced by the public amid increasing living expenses, especially young families and new entrants to the property market.
Reiterating that housing is a basic necessity and a key pillar of economic and social stability, Sheda Institute said any policy implementation that significantly increases development costs must carefully balance regulatory objectives with economic realities and long-term affordability.
It stressed that the housing and construction sector remains committed to working closely with the Sarawak government and relevant agencies to improve labour governance and compliance standards, but called for a review of the FWTA structure, administrative charges and implementation process to ensure policies remain practical, sustainable and supportive of Sarawak’s housing affordability and economic development goals. — DayakDaily
