Malaysia has deferred a controversial move to double the levy on hiring foreign workers, including many from India, that was aimed at discouraging employers from recruiting outsiders, a minister announced following a cabinet decision.

Human Resources Minister S. Subramaniam said the cabinet had decided to defer the implementation of the levy increase - from RM 1,800 ($505) to RM 3,600 ($842) - after considering requests by employers, especially restaurant owners who felt that the hike would further burden them. 

The cabinet, he said, felt it was not the right time to implement the increase due to the uncertain economic situation.

Malaysia has an estimated three million foreign workers from South Asia, including India and Bangladesh and from neighbouring Indonesia, the Philippines and Thailand.  

Various quarters 'celebrated' the good news announced on Labour Day May 1, describing it as 'a practical move especially in the current economic times', The Star newspaper said.  

However, Malaysian Trade Union Congress president Syed Shahir Syed Mohamud said the decision to defer the levy increase was 'confusing'.  

The Malaysian Muslim Restaurant Owners Association and Malaysian Indian Restaurant Owners Association expressed relief at the decision.  

Malaysian Muslim Restaurant Owners Association president Datuk Jamarulkhan Kadir said many restaurants found it hard to sustain their businesses even without the annual levy per worker being increased.  

Malaysian Indian Restaurant Owners Association president R. Ramalingam also shared Jamarulkhan's sentiments.  

'The timing to increase the levy is not right,' Ramalingam said.  

But he added that both the associations planned to work together to overcome the influx of foreign workers by giving priority to local workers.