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April 1994, Volume 1, Number 3

Malaysia: A Special Report

The Malaysian government estimated that 50,000 mostly illegal Indonesians left the country during the March 14-15 Hari Raya festival that marks the end of Ramadan. According to Deputy Home Minister Megat Junid, the federal police crackdown known as Ops Nyah II was largely responsible for these "voluntary" exits. Under Ops Nyah II, the Immigration Department arrested 54,155 illegal aliens between July 1992 and December 1993.

According to Malaysian authorities, most of the illegal aliens in the country are foreigners who pay bogus job agencies in their home countries for what the worker may believe to be a valid work permit and job. The mostly Indonesian and Filipino workers are then brought into the country illegally, and issued false work permits--the cost of illegally crossing the 20 mile Strait of Malacca that separate Indonesian Sumatra from Peninsular Malaysia is reportedly less than US$10.

Many Malaysian employers of foreign workers are labor contractors in the plantation and construction sectors. They argue that some of the foreign workers arrested by Malaysian police during worksite raids are in fact legal workers, and that only a slow government bureaucracy--it can take six to eight months from the time an employer applies for foreign workers until they arrive-- makes the workers only technically illegal. They note that Malaysian employers were certified to need 425,000 foreign workers between July 1, 1992 and December 31, 1993, but that only 190,000 work permits were actually issued.

In January 1994, Malaysia announced a freeze on the further admission of unskilled and semi-skilled immigrant workers. However, Malaysia has continued to permit employers to hire illegal alien workers who were in the country before the freeze was announced. Malaysian employers whose need for foreign workers has been certified are allowed to hire the 4,866 illegal aliens in who were being held in eight detention centers in February, 1994.

Malaysia is engaged in a debate over how to control illegal immigration into one of Asia's fastest-growing economies that is already at full employment. Malaysia already has an employer sanctions law, but enforcement authorities have admitted that there goal is to "punish illegal workers, not Malaysian employers." Many Malaysian employers reportedly believe the labor agents, who bring most of the foreign workers into the country, when they are told that the workers are legal, and the agent is simply keeping their work permits for safekeeping.

There are apparently few fines levied against employers who hire illegal aliens, although in April 1994, the Malaysian Parliament is expected to approve amendments to the sanctions law that would increase fines on employers who hire illegal immigrants from M$5,000 (US $2500) to M$50,000 (US $2500), and permit them to be caned, as in Singapore.

Background

Malaysia is a fast-growing country of 19 million in southeast Asia that ranks among the world's top immigration destinations. However, Malaysia is unique because it is a significant exporter and importer of unskilled migrant workers. Estimates of the number of illegal immigrants in Malaysia range from 200,000 to two million, and center on 1.2 million, while over 100,000 Malaysians work in Singapore, Taiwan, and Japan.

The Malaysian government's policies toward immigration and emigration have changed significantly in recent years. The 1968 Employment Restrictions Act, which required Malaysian employers to get work permits for non-citizen workers, resulted in thousands of Indian and Chinese plantation workers being forced to leave the country. However, as manufacturing employment expanded in the 1980s, the gap between real wages in agriculture and manufacturing widened from one to two in 1967 to one to three in 1981.

Plantation owners complained of labor shortages--40 percent claimed that they lost rubber and palm oil production in the early 1980s because of insufficient labor. The government "tolerated" the growing number of illegal alien workers on plantations, and permitted contractors to use foreign workers to clear land for resettlement programs on which native Malays (Bumipatra) were to be resettled after foreign workers had prepared rubber and palm oil estates for them.

The number of illegal aliens rose to "crisis" proportions in the mid-1980s. The Malaysian government responded by stepping up border and interior enforcement, and making agreements in 1984-5 with Indonesia and the Philippines, Thailand, Bangladesh, India, and Pakistan to recruit legal foreign workers in the event of labor shortages.

Current Programs

Under the government's current foreign worker program, employers try to recruit Malaysian workers by advertising for them and working with local Employment Service offices to find local workers. If local workers are not available, the Ministry of Human Resources certifies the employer's need for foreign workers, and "Registered Agents" or labor contractors provide the names of the Indonesians or Bangladeshis who will be brought to Malaysia.

Foreign workers receive one-year work permits, which can be renewed. They are required to obtain Immigration Department approval to change jobs or employers. The penalty for violating these regulations is a maximum fine of $M 10,000 (US$2500), or five years imprisonment, or both. In 1993, 8,893 foreigners were detained for violating the terms of their visas and 4,925 were deported after serving their sentences.

Malaysia may imitate neighboring Singapore and refine the levy system it now uses to discourage reliance on foreign workers--Malaysian employers must in most cases pay $RM 420 per year--by adding sector-by-sector limits on foreign workers. In response to a question, Singapore Labour Minister Lee Boon Yang noted that the 200,000 foreign workers in Singapore are 12 percent of the workforce of 1.6 million, and that Singapore is unlikely to be able to completely phase out foreign workers because of the slower indigenous workforce growth and the rapidly aging population.

Singapore regulates foreign worker employment with an annual levy--highest for unskilled workers--and per firm ceilings that vary from industry to industry. However, employers can have the levy rebated on foreign trainees--the lower of 100 foreigners or 10 percent of a company's workforce-- who are in the country for up to six months. Singapore has 65,000 foreign maids, and is debating measures--including random inspections-- to protect them from abuse.

Nayagam, James. 1992. "Migrant Labor Absorption in Malaysia," Asian and