SMEs in Belait respond favourably to JIPTA

National 2 minutes, 9 seconds


SMALL and medium-sized enterprises (SMEs) in Belait are favouring the newly introduced foreign worker insurance guarantee (JIPTA) by Takaful Brunei Am to free up funds that would otherwise be held by the traditional security labour deposit.

Hundreds of company representatives from Belait turned up yesterday at the Labour Department’s second roadshow on the revamped options for the security labour deposit, with SMEs responding the most favourably to JIPTA while established businesses expressed their preference to maintain their banker’s guarantee to secure the deposit.

Under the revamped system, companies hiring foreign workers can either pay a security labour deposit, which was recently reduced, via cash or a banker’s guarantee. Or they can opt for JIPTA, which will cost four to eight per cent of the deposit per annum of the employee’s contract or work pass. The exact premium depends primarily on the sector the worker is employed to.

The deposit is required under labour regulations to insure against costs arising from disputes between an employer and employee, including reparation costs. It is separate from workmen’s compensation insurance which is also mandatory for employees.

As an example, Takaful Brunei Am representatives yesterday said that JIPTA, with an average insurance premium of five per cent per annum, would approximately cost $62.50 for a worker from Malaysia, Indonesia, the Philippines, Thailand or Singapore arriving in the sultanate to work on a two-year contract.

The figure represents 12.5 per cent of the $500 deposit required for foreign workers from those countries. Under a premium of five per cent, two years adds up to only 10 per cent.

But since the Labour Department requires the foreigner to be insured for an additional six months beyond the contract date to account for any short-term or last-minute extensions, an additional amount is chargeable (2.5 per cent if the yearly premium is 5 per cent).

The security deposit, unlike the insurance, is refundable if the foreign labour licence is not renewed. JIPTA does not apply to foreign domestic workers, whose deposit must be paid for in cash.

Sharing a common view from SMEs, Hj Amit Sallehin, who manages a small restaurant and catering business in Kg Pandan, said newer businesses unsure if they would be needing foreign labour in the long term would favour JIPTA.

“It’s a one-off cost that requires much less than the deposit. And although it isn’t refundable, you don’t have to carry the risk of losing the deposit. In the worst case scenario of a dispute (under JIPTA), you don’t personally settle the full amount as the insurance would cover it.”

The Brunei Times