Published January 23, 2009

KL bans foreign hiring for manufacturing, services sectors

Firms told to lay off foreigners first if they must slash jobs

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(KUALA LUMPUR) Malaysia has banned the hiring of foreign workers in factories, stores and restaurants to protect its citizens from mass unemployment amid the global economic downturn, a government official said yesterday.

Mobile labour: The manufacturing and services sectors currently employ nearly half of the 2.1 million legal foreign workers in Malaysia

The government has also ordered companies to lay off foreign employees first if they must slash their workforce, a Human Resources Ministry official said.

The Cabinet has approved an indefinite hiring ban for the key manufacturing and services sectors, which currently employ nearly half of the 2.1 million legal foreign workers in Malaysia, the official said on condition of anonymity because he was not authorised to make public statements.

The official was confirming a decision announced late on Wednesday by Human Resources Minister S Subramaniam.

Local media reported the minister as saying Malaysia 'can put a stop to hiring' foreign workers if they are not needed.

Foreigners currently working in both sectors can continue until their contracts expire or until they are laid off, but no new non-Malaysian workers will be approved, the official said.

'We want to make sure that all locals who have been (laid off) can get a new job,' he said.

The official said that exemptions may be given to skilled foreign workers who are needed for some of the country's service industries and factories, most of which produce electronic and electrical goods, textiles and furniture.

More than 10,000 Malaysians and 3,000 foreigners lost their jobs between October and January because of a slowdown in Malaysia's export-dependent economy.

The government has predicted another 45,000 Malaysians could be out of work by the end of the year.

Foreigners can still be employed in sectors such as plantations and construction, where it is tough to find Malaysians to hire because of the low salaries and arduous work, the official said.

Eka Suripto, an official at the Indonesian Embassy in Kuala Lumpur, said that `Indonesia expects one-third of its 300,000 nationals working in Malaysia's manufacturing industry to lose their jobs this year.

'Certainly what they will sacrifice first are the foreign migrants,' he said.

Adding to the number of legal foreign workers, there are an estimated one million illegal migrants employed mainly at plantations, construction sites and restaurants.

Most come from poorer Asian nations such as Indonesia and the Philippines.

Malaysia's government has struggled to assure the public that the country won't slip into recession.

The authorities have forecast that Malaysia's economy will expand by 3.5 per cent in 2009, but some economists have warned that growth could fall below 2 per cent. -- AP