Economists have warned that Malaysia is quickly losing its appeal as a destination for migrant workers, adding that key sectors in the country were already struggling with manpower shortages due to regulatory obstacles to foreign recruitment.
Speaking to Malay Mail, Carmelo Ferlito, the chief executive of the Centre for Market Education (CME) and a senior fellow at the Institute for Democracy and Economic Affairs (Ideas) said the issue would leave Malaysia’s economy vulnerable to falling behind regional rivals in attracting investment if not swiftly addressed.
In the 90s when Malaysia is experiencing its economic boom, the country had been a preferred destination for workers in poorer neighbouring countries seeking better fortunes. However, things began to change after the Asian Financial Crisis and the situation had worsen while others in the region recovered faster.
The experts also commented that the development in the country has left some sectors that were reliant on migrant labour such as the food and beverage industry to struggle in the wake of the Covid-19 pandemic.
“I see two things here. First of all, as our neighbours (Indonesia, Vietnam, Philippines) are growing too — and with markets of a different scale — skilled workers find more opportunity at home than here in Malaysia, and this was already happening before the great lockdown,” the duo said.
“Secondly, during the past two years, the Malaysian government has worked hard to make the country less attractive for foreigners, with more difficult conditions for hiring foreigners, also the skilled ones.”
“As you know, you now can hire a foreigner (expatriate) in Malaysia only if the offered salary is above RM15,000 per month. If not, you have to go through a painful selection process under government monitoring, and only if it has been proved that a local worker cannot fit the position you are then free to hire a foreigner.”
Meanwhile, Ferlito also warned if the issue is resolved soon, Malaysia would force local businesses into some difficult adaptations that would range from altering their business models or shuttering entirely.
“In a nutshell, the market will work its own way out, but let’s not forget that this pain has been caused by nonsensical policies,” Ferlito said.
“There was no relationship between foreign workers ban and the spread of Covid-19, it has been just a populistic reaction; in fact, the amount of Malaysian workers that took advantage of the jobs left unfilled by foreign workers remained limited.”
When asked why Malaysians are not willing to fill in the vacancies, Ferlito said it was because there were other less physically taxing employment open to them.
He explained that Malaysia’s economy has developed to an extent that local workers need not get employed in unskilled jobs.
“This was a privilege. So, we have on one side a growing number of graduated people; on the other side the idea that indeed they can get jobs outside of the 3D (dangerous, dirty and difficult) category,” he said.
In addition, he said the emergence of the gig economy that offered very flexible employment opportunities and even more, the income is comparable to the one provided by unskilled jobs.
“All these factors contribute to keeping Malaysians away from certain jobs. The Malaysian government needs to understand that businesses are risking collapsing if foreign workers are not allowed back in.” he said.
Other than that, Ferlito also pointed out that the populist slogan ‘Malaysians first’ is actually very harmful to Malaysians themselves. He said the policy has forced businesses to face the option of having to close down for good or Malaysians will lose their job.
“I don’t see why we do not simply go back to the old system of allowing foreign workers in. It worked well for decades and it was an emotional and populistic decision to close doors to both skilled and unskilled workers,” Ferlito added.
Meanwhile, Universiti Malaya’s (UM) Prof Mohd Nazari Ismail said the best way to address this is to allow foreign workers in to keep the nation’s economy moving.
“If we don’t allow foreign workers to come in, then the cost of operations will go up and Malaysia will not be an attractive location for manufacturers,” he said, adding that manufacturers may relocate to other low-cost locations such as Indonesia or Vietnam.
“For Malaysian workers, we should try to ensure their skill levels are high so that they can undertake the jobs that require higher skills,” he added.