Malaysia is one of Asia's biggest employers of foreign labour. But recently, cases of deaths, abuse and forced labour have come to light. What is going on? Who is protecting these migrant workers?
By: YVONNE TAN
AS recent as August last year, Jonathan, who employs a Filipina maid, paid her wages amounting to a total of RM1,260 per month, which is equivalent to US$400.
This month, he will have to fork out 32% or RM400 more just to pay her the same amount of US$400.
And that’s not the only expense that has gone up.
The cost of his grocery bill has also increased substantially over the past few months, especially because of the imported goods that he buys.
Even then, Jonathan, a salaried worker, has bigger worries on a larger scale.
His son is studying in the United States, his elderly mother uses medication which is imported from the US and he doesn’t want to begin to imagine how much more he will have to pay for his car’s spare parts when he services it next.
His bills are increasing by the day – no thanks to the ringgit, which is taking a huge beating and is now trading at its lowest level since August 1998.
Against the US dollar, the ringgit is down some 32% in the past one year, trading at an intra-day low of RM4.15 yesterday.
It is also one of the worst-performing currencies in the region.
Against the Singapore dollar, it touched 2.93 in yesterday’s trading – an all-time low.
Bank Negara says the volatility should last for a few months, owing partly to the lack of policy direction from global markets which have an impact on the local market.
Governor Tan Sri Dr Zeti Akhtar Aziz said on Thursday that the central bank will not peg the ringgit and institute capital controls for the country even though the ringgit has fallen so much.
“I want to categorically emphasise that we do not expect to peg the currency. The fact that we have a flexible exchange rate regime helps our country to adapt because if the exchange rate doesn’t adjust, then prices and demand have to adjust. I want to add that we are not implementing capital controls as well,” she had said.
When asked, Zeti had stopped short of saying that there is a confidence crisis in the country.
However, economists appear to think otherwise.
“There is a confidence crisis and we have to stem it,” Malaysia University of Science and Technology (Must) School of Business dean and economist Dr Yeah Kim Leng says.
Yeah says while the fundamentals of the economy remains intact amid a healthy labour market, the country needs to resolve this crisis confidence, which has come about from a slew of political uncertainties.
This year alone, foreigners have dumped more than RM12bil worth of Malaysian shares, adding pressure to the ringgit which is already hurting from a deceleration in private consumption amid a slowdown in the global economy.
Yeah feels that externally, the second-half of the year should see some form of recovery from China after quarters of stalled growth and continued growth from the US, but internally, Malaysia would need to resolve “its own confidence crisis”.
“I believe that the oil price has almost bottomed, China is stabilising, the US is still growing – globally, things should improve in the second half. What we need to do is work on bringing back the confidence to investors, consumers and so on.”
He feels that even at 4.15, there remains room for the ringgit to go lower.
“The political situation here is still very cloudy, given that investigations into (state-owned) 1Malaysia Development Bhd are still ongoing.
“To me, whether the ringgit will go lower depends a lot on whether the political situation here worsens.”
Yeah says as a result of the sliding ringgit, there will be some adjustments in consumer spending patterns, but feels that the overall impact on consumer spending will be mostly muted, as people would still need to spend but they will buy more of lower-priced, local goods.
“There will be a substitution effect.
“Those in the lower-income bracket may cut spending, but generally, the higher-income ones will still spend, maybe purchase cheaper goods.”
Eyes will be on private consumption, which forms a large part of the economy.
In the second quarter, Malaysia’s private consumption cooled, growing by 6.4% compared with 8.8% in the first quarter, as households adjusted to the impact of the goods and services tax (GST) which kicked in in April, while private investment growth came down to 3.9% from 11.7% earlier.
Expectations are that figures will continue to show declines well into the third quarter and possibly the fourth before a rebound takes place.
“We are hoping for some offsetting of weaker private consumption, which could come from a rise in exports because of the weak ringgit which will make exports cheaper,” Yeah says.
CIMB Group chief executive Tengku Datuk Zafrul Tengku Abdul Aziz concurs with Yeah, saying that the weaker ringgit could aid exporters and provide further incentives for foreign direct investment inflows into the country.
“Domestically, our economic fundamentals remain strong, and as such, we believe the ringgit is undervalued,” Tengku Zafrul adds.
After growing 5.6% in the first quarter, the economy expanded by 4.9% in the second quarter, supported by a turnaround in agricultural production, which grew by 4.6% compared with a contraction of 4.7% previously amid higher production of palm oil.
Headline inflation was higher in the second quarter, up by 2.2% compared with 0.7% earlier due to the implementation of the GST.
Source: THE STAR ONLINE
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