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Beyond Boom And Bust, Part 1

Pitfalls of Short-Termist Migrant Worker Policies

The differing stances on migrant worker COVID-19 vaccination is just one more example of issues with Malaysia’s migrant worker policies. In Part 1 of this research series, we outline where we are today.

By Faisal Ariff22 June 2021

Migrant labour has long played an integral role in Malaysia’s history, formation and nation building. Between 1880 and 1939, Malaya absorbed the highest number of immigrants per population in the world to work on tin mines and rubber plantations. It was a period of mass migration that had a long lasting social, economic and political impact.

More than a hundred years later, Malaysia is Asia’s largest net importer of labour, heavily reliant on migrant labour in several key economic sectors. Unfortunately, our long history and extensive experience has not translated itself into long-term and robust migrant worker policies. As a country, we seem to repeat cycles of mass recruitment followed by cycles of ‘regularisation’, earning reproach from human rights watchdogs and international export sanctions in the process.

Our long-term goal to reduce our dependence on migrants is frequently undermined by contradictory short-term policies, leading to the accumulation of a high number of legal and illegal migrant workers. In Part I of this research series, we outline where we are today and explore the factors that have led to the current situation.

A Snapshot Of The (Legal) Numbers

Based on the number of Visitor Pass (Temporary Employment) or VP(TE) permits that have been issued, Malaysia officially hosts 1.99 million legal migrant workers as of August 2019. As shown in Figure 1, the distribution of migrant workers is highly concentrated – 62% are in 3 states, with the central territories of Selangor and Kuala Lumpur hosting 44% and the southern state of Johor hosting 18%.

Figure 1: Distribution of migrant workers by state, 2018

Source: World Bank Working Paper, July 2020

Based on July 2018 VP(TE) data from the Ministry of Human Resources and the Immigration Department, the sector employing the highest number of VP(TE) holders is manufacturing which employs 37% of legal permit holders, followed by agriculture (24%), domestic workers and services (21%) and construction (18%).

Figure 2: Number of VP(TE) holders by sector and country of origin, July 2018

Source: JTKSM, Ministry of Human Resources, July 2018

The distribution of VP(TE) holders by country of origin as shown in Figure 1 above points to the changing demographics of migrant workers in Malaysia. Workers from Indonesia, who represented the largest proportion of migrant workers in 2000 at 75%, comprised only 40% of migrant workers in 2018 (Figure 2). The number of Bangladeshi migrant workers have also shrunk though not as dramatically, from 20% to 15% of total migrant workers. The most significant growth is in the number of Nepalese migrant workers, from virtually 0% in 2000 to 22% of total migrant workers in 2018.

Figure 3: Number of migrant workers by country of origin, 2000-2018

Source: Foreign Workers in Malaysia: Selected Works (2000 and 2010 data); Low (2020) SouthEast Asian Studies (2018 data)

Two major driving factors are the relative strength of the economy and relative wages between Malaysia and the origin country, which affected Indonesian migrant worker numbers most. Malaysia’s GDP per capita in 1970 was 4.5 times that of Indonesia; in 2019, the differential had shrunk to 2.7 times.

Indonesia has also been progressively increasing the minimum wage level, where workers in palm oil plantations could stand to earn, in 2018, up to Rp6,000,000 (RM1,724) without being subjected to miscellaneous deductions, fees and long separations from family. If these trends continue, it is likely that we shall see a shrinking proportion of Indonesian migrant workers which could result in unanticipated cultural and political issues here in Malaysia.

But What Are The Real Numbers?

The problem with the snapshot above, however, is that it is far from being an accurate or complete picture of the migrant worker population in Malaysia today. The number of VP(TE) holders make up only a subpopulation of migrant workers and there is a great deal of uncertainty around the number of migrant workers without valid permits, or ‘illegal’ migrant workers.

On the low end, the Department of Statistics Malaysia’s 2019 Labour Force Survey estimates that the total number of foreign workers, both legal and illegal, come up to 2.24 million people in 2019. With 1.99 million legal VP(TE) holders, this indicates only 246,000 illegal migrant workers in Malaysia.

On the high end, the ISEAS-Yusof Ishak Institute suggests that there are as many as 3.9 to 5.5 million migrant workers in 2018, implying the existence of 1.9 to 3.5 million illegal migrant workers in Malaysia. These numbers would outstrip the number of valid VT(PE) holders or legal migrant workers – a staggering state of affairs if true.

While methodological differences partially explain the wide range in estimates, the implications are still of great concern. Migrant workers, both legal and illegal, could represent anything between 7% to 17% of Malaysia’s 2019 population, or 14% to 35% of Malaysia’s 2019 labour force. Such hugely varying numbers make it difficult to determine whether national targets have been met, such as the 11th Malaysia Plan target of capping migrant workers to 15% of the total labour force.

The unreliability of official migrant worker figures is partially a reflection of Malaysia’s ageing immigration systems. A 2016 Public Accounts Committee hearing highlighted a number of issues including the issuance of the same VP(TE) serial numbers for different migrant workers, VP(TE) extensions being granted by IT vendors without approval from the Immigration Department, and the practice of manual calculations and adjustments to determine how many VP(TE) holders there are at any point in time. The announcement to develop a National Integrated Immigration System (NIISe) could be a major improvement in improving data on migrant workers*, but this is only the tip of the iceberg.

*Note: Basic infrastructural issues also contribute to bad data. In East Malaysia especially, frequent power blackouts have prevented immigration officers from conducting electronic blacklist checks and the recording of traveller movements onto the central immigration database. There are, moreover, many ‘informal’ border locations with no guards, immigration office, fences or walls. Policing Malaysia’s porous borders is a major challenge with a land boundary of 2,669 kilometres and a coastline of 4,675 kilometre.

The ‘Groundhog Day’ Of Boom-Bust Cycles

The larger and more foundational issue, we argue, is Malaysia’s approach to migrant worker recruitment and economic planning today. Despite targets to reduce the country’s reliance on low-cost migrant labour, we still observe the same waves of recruitment and round-ups following phases of the economic cycle. 

Increase in economic activity would be accompanied with an increase in demand for migrant workers. The pressures to raise the migrant worker quota from companies (see primer) would result in allowing increased importation of labour, as well as ‘regularisation’ or legalisation of migrant workers without valid permits.

When the economy turns less active, demand for maintaining migrant workers would decline. Many migrant workers would find their permits allowed to lapse, rendering them as illegals and exposing them to enforcement action, detainment and deportation. When the economy improves, this cycle begins again.

Malaysia needs to make a clear break from cyclical recruitments and round-ups towards a more long-term migrant worker policy, rooted in clear sectoral planning as well as residency privileges. We discuss a few options in the next instalment of this research series, but in the meantime, we highlight two more migrant worker policy approaches in dire need of change.

When Processes Allow For Exploitation

A long-term outlook on sectoral planning and migrant worker recruitment would be ineffective unless accompanied by significant improvements to current processes. The migrant worker hiring process for example, provides many opportunities for unethical practices.

In order to work legally in Malaysia, migrant workers are often expected to take on the burden of costly up-front recruitment expenses. A large number of migrant workers incur debt in order to finance these expenses, even though such expenses are supposed to be borne by their employers. For example, up-front recruitment costs paid by a Bangladeshi worker can be as high as RM20,000 per person. Those who have not finished paying off their debt by the end of their employment pass validity would be inclined to overstay and work illegally; it has been reported that almost 70% of Bangladeshi workers overstay due to debt.

Sadly, it is also no secret that unethical practices similarly plague border control and immigration services. The Malaysian Anti-Corruption Commission (MACC) believes that 30% of border enforcement officers are involved in corruption while the Special Branch believes that the figure is closer to 80%. One of the largest cases involving frontline immigration officers was the detention of 100 immigration officers at Kuala Lumpur International Airport in 2016 for allegedly working with syndicates to smuggle in migrant workers. In 2020, dozens of immigration officers were detained for stamping passports of foreign workers and illegal immigrants who had not travelled through immigration checkpoints. Such practices also exacerbate the poor data situation, as actual numbers are not collected when the system is bypassed.

Normalised Denigration And Mistreatment

It would be remiss not to mention a key aspect of Malaysia’s migrant worker policy i.e. issues related to human rights and welfare. Notably, Malaysia has not signed or ratified the International Convention on the Protection of Migrant Workers since it was adopted by the UN General Assembly in 1990.

There are an abundance of reports involving mistreatment of migrant workers at the hands of Malaysian employers and authorities. Cases range from confiscating passports, deducting or withholding wages, extortion by authorities and gangs, to more extreme cases involving, torture, death by starvation, and outright murder. Living quarters provided for migrant workers by employers are abysmal. Indeed, the COVID-19 pandemic has brought the issue of worker accommodation vividly to light through viral images of migrant workers’ poor living conditions.

The roundups, military lockdowns and detention of illegal migrants in 2020 on public health grounds was perceived to be particularly heavy handed by some. Nevertheless, to the silent majority, it may seem acceptable. A recent International Labour Organisation (ILO) report highlighted relatively high levels of xenophobia in Malaysia against migrant workers. While calls for respecting migrant workers’ rights continue to be made, changing public perception is a much more challenging task.

Better Values, Better Policies

Malaysia’s treatment of migrant workers and refugees has been criticised at home and abroad due to high profile cases of mistreatment, poor working conditions and xenophobia. Many of the issues mentioned came to the fore in 2020, when the US Customs and Border Protection banned the importation of surgical gloves from Malaysia’s Top Glove and WRP Asia for having conditions akin to forced labour. A month later, the US Department of Labor did the same, specifically citing high recruitment fees, debt bondage, the retention of identification documents and deplorable working conditions.

In response, the Malaysian Rubber Glove Manufacturers Association announced commitments of RM250 million to pay recruitment fees that foreign workers paid to agents in their home countries, which Malaysian employers were “unaware of”. Around the same time, the US Customs and Border Patrol also banned imports of palm oil from Malaysia’s FGV Holdings for also using what the former took to be forced labour, which was met with denials from the company. 

To conclude Part I, our migrant labour issues are multifaceted and complex, but they are all arguably rooted in a short-termist outlook and questionable set of values towards imported labour. 

Quantifying the number of migrant workers present in Malaysia, both legal and illegal, is a critical step in understanding the magnitude of the problem as well as to support data-driven policymaking and impact assessment. The processes, systems and infrastructure that contribute to the illegal migrant worker numbers also need to be addressed, while doing so in a humane and even-handed manner.

In our second instalment we will delve deeper into the trade-offs involved in potential solutions, before we propose a set of policies in our third and final part.

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