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?
For example, can you visualise 24 million Malaysians or the 10,545,000 who
form the nation’s workforce? It is not easy.
<p>The same goes for the more than two million legal and illegal foreign workers
working in Malaysia. Even if i Capital reminds readers that this is more than
KL’s entire population, it may not help one visualise the immensity of
the number of foreign workers. </p>
<p>One of the biggest costs in having two million unskilled foreign workers in
Malaysia is the persistent damage and unnoticed harm to the competitiveness
of the economy. Industries, businesses and companies that survive only because
they have access to such foreign workers have no incentive to restructure or
modernise. Why should they? </p>
<p>It is more difficult to restructure or modernise one’s operations than
to just keep relying on the low-wage workers. Even pressuring the government
or resorting to illegal foreign workers is easier than modernising and restructuring
one’s operations. </p>
<p>When these industries have no incentive to reduce their dependence on such
foreign workers, the Malaysian economy gets stuck in an unproductive and uncompetitive
vicious cycle as industries and businesses continue to generate little value-add
to the economy. A very important question to ask is how and why did Malaysia
get into such a serious problem where more than 20% of its workforce is foreign?
</p>
<p>The answer from our typical economic reports and advisers to this is to blame
Malaysia’s tight labour market conditions and its sustained economic growth.
Surely, the question we have to ask is why are we generating economic growth
that only sucks in the low wage, low skilled foreign workers. </p>
<p>Why are we not attracting industries and businesses that would attract the
skilled and professionals instead? Why are our industries, companies and businesses
and government departments not modernising, restructuring and improving their
productivity? </p>
<p>Why is it that Japan, South Korea, Taiwan and Singapore, economies that enjoyed
sustained growth more rapid and prolonged than Malaysia ever did, did not end
up with such foreign workers problem? Why is Malaysia so reliant on Indonesians
workers? </p>
<p>What is important is not merely the sheer numbers but equally important, the
quality and type of foreign workers. Expatriates, who are mainly professionals
and highly skilled workers, make up a measly 3% of foreign workers in Malaysia.
</p>
<p>i Capital would like to highlight one of the most important facts that many
Malaysians do not realise: the destructive paradox that Malaysia is now in,
courtesy of the economic policies of the last decade. </p>
<p>What is this destructive paradox? She receives millions of unskilled foreign
workers while she loses or sends out to competing economies, hundreds of thousands
of skilled and professional Malaysians. </p>
<p>Is it surprising then, that many Malaysian industries and businesses cannot
move up the value and technology chain? That Malaysia loses the factories that
make air-conditioners, washing machines, televisions, hard disks, etc, but is
unable to attract the wafer foundries, the factories that make LCDs or multi-layer
PCBs, the patented drugs, the car engines, the shipyards that can make LNG tankers,
etc? </p>
<p>Is it surprising that Singapore attracts the Whartons, the INSEADs, the MITs,
the Stanfords, etc while Malaysia’s private higher education industry is
still struggling to find out what we mean by being a centre of educational excellence?
In short, why has Malaysia dismally failed to restructure its economy from labour-intensive,
low-end industries and businesses to the technology and knowledge-intensive
ones? </p>
<p>Few Malaysians, including our economic advisers, policymakers and politicians,
realise that our economic policy and philosophy have produced this destructive
paradox. Even as an emerging economy, the country is massively importing low
wage, low skilled jobs but exporting high wage, highly skilled jobs. </p>
<p>At the beginning of this article, i Capital asked readers to visualise the
two million foreign workers. Let us put it this way. Imagine that instead of
having these unskilled foreign workers, Malaysia has 100,000 foreign CEOs, 100,000
foreign entrepreneurs, 10,000 automotive and semiconductor designers and engineers,
10,000 foreign surgeons, 100,000 foreign skilled mechanics and technicians,
10,000 foreign professors in all fields, 100,000 foreign scientists in all sciences,
100,000 IT wizards, 10,000 foreign textile, fashion, cloth and shoe designers,
10,000 foreign physicists and so on until we get 2,000,000 skilled and professional
foreigners. </p>
<p>Put this way, the 2,000,000 number becomes more real, more stark. Imagine the
structure of the Malaysian economy would be transformed and the economy would
at least have a decent chance of succeeding in a globalised economy. Imagine
the immense benefits and positive impact the skilled and professional foreign
workers would have on the economy. </p>
<p>Malaysia should rethink its development and labour policies. Our problem is
not just illegal or legal foreign workers. It is much deeper than that. On the
supply side, allow and encourage the millions of Malaysian students to work
part-time or on a temporary basis. </p>
<p>There are many ways to improve the supply of labour without having to rely
so much on the low-skill foreign workers. But more importantly, a long-term
solution to improve our productivity efficiency and competitiveness is the only
way to solve our human capital problems. Changing the quality and composition
of the foreign workers will take time and involve painful adjustments. But if
effective policies are not implemented to reform soon, i Capital can only say,
the pain further down the road will be even greater.
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