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September 1998, Volume 5, Number 9

Malaysia, Singapore

Malaysia. On August 15, 1998, an estimated 237,000 work permits held by foreign workers expired. In January, 1998, Malaysia announced that most of these work permits would not be renewed. However, in June 1998, this decision was reversed, and employers in many sectors were permitted to renew work permits for foreign workers.

As of July 28, 1998, about 102,000 foreign workers who were eligible for work permit renewals had not yet had their permits renewed by their employers. Under the recently amended Employment Act of 1955, employers must appear in person to obtain or renew work permits at the Immigration Department, and then register their foreign workers with the Human Resources Ministry, with a penalty of $M10,000 a worker for failing to comply.

The government has found that, in some cases, foreign workers who were laid off but did not want to leave forged employer signatures to get their work permits renewed, or bought false work permits for M$500 to M$1000 each.

Another 216,000 foreign workers, 200,000 in construction and 16,000 in services, were supposed to leave Malaysia by August 16. As the deadline approached, the government announced that foreign workers whose permits expired would be given a grace period of two or three weeks to stay in the country saying: "If all of them were to leave Malaysia on the same day, there would not be enough boats and airplanes." Some 100,000 foreigners registered to leave Malaysia, and several airlines reported that all economy-class seats were booked to Bangladesh and Indonesia through the end of August.

The government also announced that up to 116,000 foreign construction workers may be permitted to remain for "priority infrastructure projects." In June 1998, the government approved 50,000 new foreign workers, including 20,000 for manufacturing, 10,000 for agriculture and 20,000 for Sabah.

In the days before the August 15 deadline, there was heightened tension in Malaysia due to rumors that foreign workers with expired work permits planned to riot in Kuala Lumpur. On August 7, there were reports that residents of Kuala Lumpur were stockpiling food in response to rumors that Indonesian migrants had bought machetes to resist deportation. Some of the rumors were spread on the Internet, according to the Malaysian prime minister.

Some 18,390 foreign workers left their Malaysian employers in violation of their contracts between January and June 1998, compared with 15,186 in 1997. In 1998, the number of legal foreign workers who absconded by sector included: plantation sector, 4,603; followed by manufacturing, 3,888; domestic maids, 3,730; services, 3,486; and construction, 2,683.

Beginning August 1, 1998, all foreign workers except maids must contribute 11 percent of their monthly earnings to social security, the Employees Provident Fund (EPF). Malaysian employers must also contribute 12 percent for each Malaysian employee, but only M$5 ($1.25) a month for each foreign worker. The aim of the mandatory foreign worker contributions is to reduce remittances by requiring the foreign workers to keep more of their earnings in Malaysian government debt.

Mandatory social security contributions are one reason why savings are so high in east and southeast Asia. Singapore also requires foreign workers to contribute to its Central Provident Fund, and Malaysia is demanding that Singapore permit Malaysian workers who quit working there to withdraw their CPF contributions; some 3,000 of the 9,000 Malaysians employed in Singapore shipyards have been laid off in 1998. The Malaysian Trades Union Congress plans to lodge a complaint with the ILO against the Singapore government for violating Malaysian workers rights by not allowing those who have been laid off to receive their CPF contributions, which are estimated to be M$2.4 billion.

Singapore law permits Malaysians, except those from Sabah and Sarawak, to withdraw their CPF savings at age 55. In contrast, Malaysia allows foreign workers to withdraw their entire contribution to the Employees Provident Fund (EPF) when they leave Malaysia.

Malaysia-Singapore Dispute. Singapore was a part of the Malaysian Federation between 1963 and 1965. There is a great deal of cross-border traffic, with an estimated 200,000 Malaysians commuting daily or weekly to jobs in Singapore, and Singaporeans going to Malaysia for entertainment and tourism.

Malaysian Customs, Immigration and Quarantine (CIQ) procedures are completed at the Tanjung Pagar railway station in central Singapore on land owned by the Malaysian railroad. On August 1, 1998, Singapore moved its CIQ facilities to the Woodlands, closer to the Malaysian border. Malaysia refused to move its CIQ facilities, so that rail passengers must undergo two inspections at two locations. Though the incident strained relations between the two governments, visits between Malaysian and Singapore were unaffected.

There are an estimated 100,000 foreign maids in Singapore. Maids in Singapore, who earn $200 to $250 a month, must pay about $600, or three months salary, to recruitment agents to get contracts.

Singapore has 3.1 million residents.


Sharif Haron, "Singaporeans not swayed by adverse reports on Malaysia," New Straits Times, August 13, 1998. Hayati Hayatudin, "Alien workers get extra month to return home," New Straits Times, August 12, 1998. Hamisah Hamid," MTUC to complain against S'pore to ILO on CPF issue," Business Times, August 10, 1998. Loong Meng Yee, "Order out to nab agents renewing work permits for foreigners," The Star, August 3, 1998. Jasmina Kuzmanovic, "Singapore's Foreign Maids Struggle," AP, August 2, 1998.