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September 1997 Volume 4 Number 9

Malaysia Stops Recruitment


On August 20, 1997, the Malaysian government announced that it would freeze the recruitment of new unskilled foreign workers, the latest round in the country's stop-go foreign worker policies. In 1996, the government also stopped recruitment, but permitted employers to legalize the status of their illegal foreign workers.

The number of foreign workers is estimated to be 1.7 million to 2.3 million, or 20 to 27 percent of the 8.7 million strong Malaysian labor force; the government estimate is 1.7 million.

The Malaysian Association of Foreign Workers Agencies said it was stunned by the decision to freeze recruitment of foreign workers and plans to appeal the action; most foreign workers are brought into Malaysia by middlemen brokers. Malaysian trade unions, on the other hand, support the freeze and have also proposed returning foreign workers who have completed their employment contracts.

Malaysia is also considering ways to make its foreign worker policies more transparent, consistent and easier for employers. The 1996 recruitment halt was accompanied by a June 1996-January 1997 amnesty that granted temporary permits to illegal workers. These temporary permits must be converted by Malaysian employers into one-year permits by August 31, 1997, prompting long lines in immigration offices. Malaysia had previous amnesties in 1989 and 1991.

The Malaysian government is studying a proposal to renew the work permits of foreign workers on a staggered basis beginning in 1998. Under the proposal, employers with less than 50 foreign workers can renew permits two months before expiration. Only employers with more than the stipulated number of employees will be allowed to renew permits on or before August 15 of each year. By instituting this process, the government hopes to avoid long queues.

The Malaysian government announced on August 26 that it would not renew work permits for foreign maids who have been in Malaysia for the maximum of five years. With wages reaching M$750 to M$800 per month, "more Malaysians should be hired as domestic helpers instead of depending on foreigners." There are about 30,000 Filipino maids in Malaysia and the Philippine government recently proposed that their minimum wage be increased from M$500 ($180) a month to M$750 ($270). According to the deputy home minister, the freeze is flexible and could be lifted should the need arise.

Malaysia and Indonesia reached an understanding in August, 1997 on preventive measures to reduce the illegal entry of Indonesians into Malaysia. Indonesia will increase surveillance along its borders in order to stop Indonesians from leaving illegally for Malaysia. Also in August, 1997, Indonesia's president authorized a bridge spanning the Strait of Malacca between the island of Sumatra and Malaysia, which is 30 miles wide at its narrowest point.

The Malaysian government reported that 99,948 Indonesian maids had been legalized; 57,986 employed in the formal sector and 41,962 in the informal sector. Another 432 Indonesian maids were being detained; Malaysian employers are permitted to hire them from detention camps.

There are an estimated 600,000 Indonesians workers legally in Malaysia plus illegal Indonesian workers. Some 10,000 Indonesians were returned between January and April 1996. Several thousand Indonesians are being held at 11 detention centers throughout Malaysia. The woman accused of violating section 8A(1) of the Printing Presses and Publication Act 1984 by publishing a report on conditions of detained foreigners in these camps has been allowed to leave Malaysia to participate in several UN meetings. Her passport had been impounded in March 1996.

The Home Ministry plans to introduce colored identity cards, with each color designating an industry, as a substitute for passports and work permits to make it easier to prevent foreign workers from changing industries: "foreign workers would be required to wear the work permit tags at all times so that they could be easily identified if they run off to work elsewhere."

Deputy Home Minister Datuk Mohd Tajol Rosli Mohd Ghazali said: "From past experience, we know that Indonesians are suited for work in the plantation, construction and service industries. Other foreign workers like Bangladeshis, generally do not last in such jobs. They leave after a month or two, and this causes a lot of problems."

Malaysia is also introducing "smart cards" for Malaysians and Singaporeans who commute daily between the two countries.

Malaysia currently permits the entry of foreign workers from Bangladesh, Pakistan, the Philippines, Indonesia and Thailand, and has employer sanctions laws that permit fines of up to RM10,000, caning, and jail for employers with five or more illegal alien workers.

The Malaysian government said in August that it would use the Immigration Act and Penal Code to strictly deal with foreigners who commit crimes.

Foreign firms operating in Malaysia were advised to use local security firms with local guards rather than foreign firms and workers to guard construction sites.

Malaysian police continue to conduct midnight raids to find suspected illegal aliens. A 2 AM raid of workers' hostels in Malacca, for example, found 145 illegal aliens from Bangladesh, Indonesia, India, Pakistan, Nepal and the Philippines.

The Malaysian human resources ministry in November 1996 required Malaysian employers to insure their foreign workers and gave the contract to general insurer London & Pacific, which offered to insure foreign workers for M$120 a month. Employers had until November 1997 to insure their workers, but in August 1997, several employers complained that Lonpac refused to pay for insured workers.

Labor-Saving Technology. The Malaysian human resources minister on August 14 told the National Labor Advisory Council that the government, employers and trade unions must work together to reduce dependence on foreign workers: "We do not want the country to be too dependent on foreign workers." The government plans to offer an incentive to organizations that hire few or no foreign workers and has announced that fewer foreign workers will be needed as the Malaysian manufacturing sector is encouraged to switch to capital-intensive technologies.

Sabah/Sarawak. Malaysia became an independent country in 1963 and the eastern states of Sabah and Sarawak on Borneo were permitted to control immigration from peninsular Malaysia. In August, there were articles asking why, after 34 years, Malaysians must carry passports or fill out arrival forms when visiting Sabah and Sarawak, and lawyers from peninsular Malaysia are not permitted to practice in Sabah and Sarawak unless they obtain work permits. Malaysia became independent from the UK on August 31, 1997.


Chen May Lee, "Companies Rely Heavily on Immigrant Workforce," Wall Street Journal, August 28, 1997. Sarban Singh and P. Chandra Sagaran, "Mixed reaction to freeze on foreign worker intake," New Straits Times, August 22, 1997. Kyodo News Service, August 20, 1997. Fadzil Ghazali, "Be less dependent on foreign labor: Lim," Business Times, August 15, 1997. "Malaysia, Indonesia Confident of Illegal Entry Progress," Asia Pulse, August 14, 1997. "Malaysia to Introduce Identity Cards for Foreign Workers," Asia Pulse, August 11, 1997. "Strict controls on illegal migrants to stem rise in crime," Singapore Straits Times, August 11, 1997.
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