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KUALA LUMPUR, Aug 12 (Bernama) — On our way forward, do we still need that

many unskilled cheap foreign labour when Malaysia’s next growth target is to

become a high-income economy?

Malaysian Trades Union Congress deputy president Mohd Jafar Abdul Majid said

there was no doubt that foreign workers had contributed to Malaysia’s economic

growth, especially in sectors where there were acute shortage of workers such as

construction and plantation.

“But our economy is swarmed with foreign workers who are unskilled or have

low skill sets that cannot contribute meaningfully to Malaysia”s aspiration

of becoming a high-income economy.

“I think we have been too dependent on this group of foreign workers for far

too long,” he told Bernama.

The 2010/2011 Economic Report states that of the 1.8 million registered

migrant workers in Malaysia, 38.2 per cent were employed in the manufacturing

sector, 16 per cent in the construction and 14.2 per cent in the plantation




Indonesians accounted for the highest number of registered foreign workers

in Malaysia at 50.9 per cent, which was attributable to their country”s

proximity to Malaysia and cultural and language similarities.

Bangladeshis were second highest, accounting for 17 per cent, followed by

Nepalese at 9.7 per cent, Myanmars at 7.8 per cent, Indians at 6.3 per cent and

Vietnamese at 4.2 per cent.

However, the high dependency on foreign labour is not unique to Malaysia

alone as the problem is also faced by countries with high growth rates such as

Singapore, United Arab Emirates and Saudi Arabia.

Such high dependency creates not just numbers and percentages, but also

gives rise to issues that could affect the people’s support for the government,

like in the case of Singapore.

“For example, in Singapore the issue of foreign workers became one of

the dominant issues during its recent general election.

“Singaporeans felt the government was too lenient on foreign workers that

many felt alienated. That”s why the opposition made some gains,” said a

research fellow at the Institute of East-Asian Studies, Universiti Malaysia

Sarawak, Dr Awang Azman Awang Pawi.



He said the robust economic growth in the past two decade has led to a

higher standard of living which also contributed to the locals” aversion to the

3D (dirty, demeaning and dangerous) sectors, which were eventually filled up

by unskilled foreign workers.

“We have become a nation that is too dependent on foreign workers,

especially in our services industry or 3D industry. For example, we are too

dependent on maids from Indonesia and it”s the same with our plantation sector.

“This doesn”t contribute much to our economy as most of the income received

by these workers are channelled back to their home countries,” he said.

Since the 1980s, Malaysia”s economy has been driven largely by the

export-oriented manufacturing sector, especially the electrical and electronic


The government, perceiving foreign workers as a cheap source of labour that

could enhance the country”s export competitiveness had been encouraging the

deployment of foreign labour in the 1990s.

As a result, local manufacturers have enjoyed a steady supply of cheap

labour for the past two decades, and Malaysia has been able to maintain

its competitiveness.



Some economists say that while Malaysia”s previous liberal policy on foreign

workers has helped it maintain its competitiveness, this policy has also

contributed to the situation that puts the country in the middle-income trap.

Prof Datuk Dr Mohamed Ariff of the Malaysian Institute of Economic

Research believes that if Malaysia had not allowed the massive influx of foreign

workers, local manufacturers would have been forced to innovate and automate to

boost productivity to maintain their competitiveness.

Economists say continuous dependence on cheap foreign labour would not

encourage local corporations to mechanise, which is necessary to push the

economy to a high-income level as defined by the World Bank.

“Over-reliance on foreign workers can have detrimental consequences, and

that is why the government is looking at ways to reduce dependence on them.

“This high dependence cannot be done away with overnight, as a sudden

repatriation of foreign workers can have serious repercussions on the economy,

especially in sectors like manufacturing, construction and plantation,” Mohamed

Ariff was reported as saying.



To lift Malaysia to a higher-income status, economists say more incentives

should be introduced to spur businesses to become less labour-intensive.

The government”s effort in reducing the country”s dependence on low-skilled

foreign workers has been ongoing, as evidenced in the gradual reduction in the

number of registered foreign workers over the last two years.

The target is to reduce the number of foreign workers to 1.5 million by


Many economists feel that what Malaysia needs is skilled or highly skilled

workers, not cheap, unskilled foreign workers.

The Federation of Chinese Associations of Malaysia (Huazong) said foreign

workers were still needed but what the government should do was to standardise

enforcement on illegals by the various enforcement agencies.

“We welcome efforts to legalise illegal foreign workers through the current

registration exercise so that the government can monitor their activities and

address related issues, such as crime.

“However, whether you like it or not, our country still needs foreign

labour, but through a balanced policy,” said its president Tan Sri Pheng Yin




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