An Malaysian employer was sentenced to one stroke of the rotan for hiring illegal foreign workers in Selangor, says Immigration Department director-general Datuk Seri Mustafar Ali..
He said that although the law provides for such punishment, it was never meted out in the state before.
Mustafa said the 46-year-old owner of a bakery in Subang Jaya was sentenced on Dec 12 to six months in jail and one stroke of the rotan for employing 15 illegal immigrants who did not have valid passes.
The offence under Section 55B of the Immigration Act 1959/63 provides for a fine of between RM10,000 and RM50,000 or a maximum one year in jail or both for each illegal immigrant employed.
“With this first case, we hope it will serve as a deterrent to employers from hiring illegal foreign workers,” Mustafar told the press after opening the state-level Immigration Day celebration here Thursday.
Mustafar also called on employers who have registered for the illegal foreign workers rehiring programme but have yet to complete the application process to come forward before the June 30 deadline.
“They can come to any Immigration office to complete the application process, including having their biometric verification done so that temporary work permits can be issued to their workers,” he said.
He said so far, a total of 630,000 illegal foreign workers and 55,000 employers have been registered under the rehiring programme, conducted between February and December last year.
However, only 233,000 applications were complete for further processing while the rest still need further action from the employers.
“Employers who no longer need the services of their foreign workers can send them to the department to be deported to their respective countries,” he said.
He added that the workers could also surrender themselves for deportation.
At least 50% equity in all businesses in Kuala Lumpur must be owned by Malaysians starting next year, said Kuala Lumpur City Hall (DBKL) executive director (Socio-Economic Development) Datuk Mohd Sauffi Muhamad.
He said businesses that failed to do so will have their business premises licence revoked.
A business owner raising her concerns during the dialogue.
“The Companies Commission of Malaysia currently allows businesses with only 1% of its equity held by Malaysians. We fear a situation where Malaysians will soon have to work for the foreigners.
“Besides that, we also want all businesses to have at least 50% Malaysian staff.
“These moves are to curb the monopolisation by foreigners in businesses, especially in critical areas including Jalan Tun Tan Siew Sin, Leboh Pudu, Bukit Bintang, Medan Pasar, Pusat Bandar Utara, Jalan Chow Kit, Leboh Ampang, Petaling Street, Kuala Lumpur Wholesale Market, Selayang Daily Market, Chow Kit Market, Pudu Market and Keramat Market
“It has come to a point for us to make a radical decision before the situation gets out of hand.
“I am not denying that it will be a difficult to adapt to the changes but I hope the local business community will support this initiative,” he said after a dialogue with the traders and hawkers in Menara DBKL on Nov 24.
Mohd Sauffi said since 2012 to October this year, DBKL enforcement unit had confiscated items from 23,553 foreign hawkers and 544 local hawkers’ licences were revoked for using foreign services during that period
“DBKL has never issued hawkers licence to foreigners and hawkers are strictly forbidden from hiring foreign helpers.
“As of October this year, DBKL has identified 7,400 foreigners working for Malaysian hawkers, who are now at risk of having their licences revoked.
“DBKL has formed a task force to engage the business community over the new licence conditions and educate them on what can and cannot be done.
“From Jan 1, we will go all out to enforce the new rulings,” he said.
Also present at the dialogue was Immigration Department enforcement director Datuk Jaafar Mohamed and DBKL Licensing and Petty Traders Management director Datuk Ibrahim Yusof.
Jaafar said there were two million registered foreign workers and based on his estimation, there were about 600,000 illegal foreign workers in Malaysia.
“In 2015 and 2014, a total of 245,000 and 179,000 illegal foreigners were sent back to their home countries, respectively.
“The high number of illegal foreign workers are also due to the locals hiring illegal foreign workers for the cheap labour and to avoid paying the required taxes.
“I hope the locals will stop hiring them and consider the social and economic implications,” he said.
The Malaysia Cabinet is lifting the freeze on hiring foreign workers for four sectors, says Transport Minister Datuk Seri Liow Tiong Lai. The decision was made in light of appeals from the manufacturing, construction, plantation and furniture-making industries, which are facing a major shortage of workers.
“In view of the acute shortage, we have to lift the suspension to allow these sectors to bring in foreign workers,” said Liow.
However, he said that the Cabinet was already looking to improve the system for hiring foreign workers, after which they would gradually lift the hiring freeze for other sectors too.
“On other sectors, we will go on a case-by-case basis, while waiting for the creation of a more foolproof, transparent and accountable system,” he added.
“Workers are important for the productivity of these sectors, so if employers face too many uncertainties in hiring workers, that will not go well for the nation’s economic growth,” he said.
Liow added that it would take time for the Government to engage with the various industries to better understand the situations that each sector faced.
However, he emphasised that it was important for the Government to regulate and have proper control over the hiring of foreign workers in Malaysia.
The Star reported recently that a survey by the Federation of Malaysian Manufacturers showed that 84% of manufacturers were facing a labour shortage, with half of them claiming that they had not been able to fulfil existing orders.
The survey showed 146 companies required 13,270 new workers this year to meet their business needs and replace unfit or returning workers.
Minister in the Prime Minister’s Department Datuk Seri Dr Wee Ka Siong said the illegal foreign workers’ rehiring programme must be made more efficient to assist manufacturers, who were facing a manpower shortage due to the freeze on foreign workers since February.
Only 55,000 illegals have been rehired so far, out of the estimated 1.4 million said to be in the country.
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The freeze on the hiring of foreign workers from February reveals how reliant Malaysia’s economy is on low-wage labour for growth. More engagement needed with industry to avoid labour shortage in certain sectors.
A rough calculation by Malaysian Palm Oil Association chief executive Datuk Makhdzir Mardan showed that in 2013, when the plantation industry had a shortage of 23,500 workers, the opportunity cost came to RM1.6bil. He points out that in 2013, one foreign worker who works as a harvester equalled RM500,000 in productivity.
While the over-arching industrial policy is to produce higher value-added goods and services, the truth is that large segments of the economy is still very much dependent on low-wage labour, particularly of the low-skilled foreign migrant-worker kind.
Migrant workers Manik and Mohammad Delowar, both 27 years old from Bangladesh, are two such workers working on the multibillion ringgit Sungei Buloh-Kajang MRT line. Manik has lived in Malaysia for the last eight years and has worked on three property projects before being employed to work on the MRT project.
Both earn a salary of between RM1,500 and RM1,600 per month, 75% of which is remitted home to support their families. Manik told StarBiz that the freeze, which came about after a public outcry over an agreement between the governments of Bangladesh and Malaysia to supply low-skilled workers, would definitely affect the flow of workers that wanted to work in Malaysia.
“I do not wish to go back to my country as I’ll not be able to find a job there,” he said, adding that unemployment in Bangladesh was high and he had to support a family of six.
Manik paid RM8,000 to an agent and waited a year before securing a job in Malaysia. He sold land and borrowed money in order to pay for the fees. Mohammad, who has been working in Malaysia for eight months, paid RM12,000 in fees.
Their experience tell the often unheard human story of foreign workers in Malaysia. These millions of workers who come from the most part from Bangladesh, Indonesia, Myanmar, Nepal, the Philippines and Vietnam are familiar faces in various sectors of the economy. The construction and agriculture sectors cannot do without them while the services sector, especially the hospitality, food and beverage and security industries, have large numbers of foreign workers.
Although the low-cost model of growth has served Malaysia well in the 1980s and 1990s, it has also made local firms reluctant to adopt technology or more efficient ways of doing things. Malaysia’s membership of the Trans Pacific Partnership makes higher productivity and efficiency ever more urgent.
Economists argue that without a rise in productivity, measured in the production of higher value-added goods and services, wages will continue to be low. The large number of foreign workers with their lower skill sets and low wages makes things worse.
This is not to say that there are no higher value-added goods or services being produced, or that the Government is not encouraging it. The New Economic Model, together with the National Key Economic Areas, have identified various sectors and subsectors in which Malaysia can have a competitive advantage.
Leadership, clear-cut policy on foreign workers and investment in education as well as technology are just some of the issues that come into play as the country strives to reduce its reliance on low-wage workers and move up the value chain.
Master Builders Association Malaysia president Matthew Tee and Makhdzir agree that the adoption of technology and mechanisation will reduce dependence on foreign workers.
Tee said the Government should provide more incentives for construction firms to adopt more efficient processes such as the industrialised building system (IBS) that could reduce dependence on low-skilled migrant workers. He pointed out that reducing the import duties on construction machinery could also help.
Meanwhile, Makhdzir said more funds should be allocated to oil-palm research and development (R&D) to make the industry more competitive. “If we desperately need to make that progress, we need to put in more talent, and more money to make it competitive in terms of R&D,” he added.
Makhdzir said the policy needed to be more flexible where R&D was concerned as talent must be sourced from outside the country if necessary.
But in the meantime, the freeze on foreign workers is causing a lot of problems as news headlines in recent months show. The problem is particularly acute in the construction and agriculture sectors.
Tee said there was a shortage of 1.3 million workers in the construction sector and predicted a shortage of up to 2 million by 2020. “This will cause delay in projects which could result in liquidated damages by clients translating to thousands of ringgit per day,” he adds.
Tee observed that the government-initiated rehiring programme that in part would also legalise illegal foreign workers had only attracted 3% of the 1.7 million total number of illegal workers in the country. He said the requirements to legalise the workers were inflexible and because of that, many did not fit the requirements – one reason why the overwhelming majority had decided not to get properly documented.
He said firms wishing to hire workers under the rehiring programme found it more expensive than hiring fresh foreign workers. On the other hand, Makhzir said there needed to be leadership in tackling the issue while Tee said there needed to be more engagement with industry as the reaction from the authorities had been slow.
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“In view of the acute shortage, we have to lift the suspension to allow these sectors to bring in foreign workers,” said Liow.