Immigration Laws: July, 1995 - Number #21

Malaysia's Human Resources Ministry in June outlined strategies to increase the supply of local workers and to reduce dependence on foreign workers.

Malaysia has an unemployment rate of less than three percent, and a recent poll of 150 local, foreign and joint-venture companies reported that 62 percent of the foreign firms in Malaysia face labor shortages, but only 28 percent considered the problem serious. One-third of the foreign and joint-venture companies might shift some of their operations to other countries if labor shortages continue.

Thirty-three percent of the companies in the manufacturing sector indicated a need for the government to play a greater role in upgrading training, productivity and setting up vocational institutes, and 28 per cent wanted a relaxation of the restrictions governing the importation of foreign labor.

Many of the electrical and electronics foreign firms in Malaysia recommend that the government legalize illegal foreign workers in the country to alleviate the labor shortage.

When the government recently raided Bangladeshi housing areas, there were reported to be shortages of gas station attendants. Tighter restrictions on Indonesian migration reportedly led to farm labor shortages.

There are reportedly 850,000 legal foreign workers in Malaysia, including 100,000 maids, and 400,000 illegal foreign workers.

Instead of hiring more foreign workers, Malaysia would like to raise the 47 percent female labor force participation rate, to increase the number of part time jobs, and to make unemployed workers in depressed regions more mobile, so that they could move to where jobs are. In addition, the Malaysian government's Seventh Plan (1996-2000) provides M$1 billion to build seven more training centers which are expected to add 10,000 skilled workers annually.

Malaysian trade unions note that several hundred thousand Malaysians migrate overseas for jobs, and that the solution to the labor shortage is to raise wages. In southern Malaysia, Malaysians commute to jobs in Singapore, while foreign workers fill in behind them in Malaysia.

Foreign workers who change jobs in Malaysia can be charged up to $US122, while employers who hire illegal foreign workers can be fined up to $US 4,098, plus face five years imprisonment. Some foreigners reportedly enter Malaysia as maids, and then go to work in higher-wage restaurants, grocery stores, and offices.

Malaysia and the Philippines agreed to develop an identification system for legal Filipino workers. The Philippine government estimates that there are four to six million Filipinos in 130 countries, and new laws grant these overseas Filipinos new tax exemptions and protections.

The Philippine government asked Malaysia to grant partial amnesty for its illegal workers in the country so that they could be properly registered. The Philippine government said it will welcome back any illegal workers who wish to return home.

The Maybank of Malaysia, Philippine National Bank and Indonesia's Lippobank have implemented a joint electronic remittance system. The system enables Indonesian workers in Malaysia to remit money for a $4 fee at any of the Maybank branches, to be collected at any Lippobank branch in Indonesia.

The three banks hope that the new system will funnel the money away from unregulated couriers, who sometimes charge high fees and use arbitrary exchange rates.

"Labour shortages may make firms in Malaysia shift: Poll," The Straits Times (Singapore), June 7, 1995. "Automation Key to Alleviating Labour Woes," Business Times, June 6, 1995. Ahirudin Attan and David Ong-Yeoh, "Foreign Firms Mull Shifting Some OPS," Business Times (Malaysia), June 6, 1995. Zulkifli Othman, "Joint Remittance System Agreement," Business Times (Malaysia), June 16, 1995. "Plans to curb dependence on foreign workers outlined," The Straits Times, June 11, 1995; Hamisah Hamid and David Ong-Yeoh, "Labor shortage no cause to fret," Business Times (Malaysia) June 10, 1995. Jimmy Yeow, "Partial Amnesty for Illegal Filipino Workers," Business Times, June 2, 1995.