Published March 16, 2009

MALAYSIA INSIGHT
The foreign worker gravy train

Outsourcing companies that rake in commissions by importing labour are proliferating

By S JAYASANKARAN
KL CORRESPONDENT
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A RECENT flap over the continued import of Bangladeshi workers has put the issue of foreign labour back in the spotlight. Indeed, it wouldn't have even cropped up if it hadn't been for a casual remark by a labour councillor from the Bangladesh Embassy last week. He mentioned that 70,000 Bangladeshis had just been cleared for work in Malaysia.

That was enough to enrage the Malaysian Trades Union Congress, the umbrella union for the private sector. The union asked the visas to be revoked given the country's economic woes and the fact that thousands of Malaysians 'were facing retrenchment, layoffs and shorter working weeks.'

The Human Resources Ministry clarified that the arrangement had been made 'before' January when a blanket freeze had been imposed on new foreign workers. The Ministry also said the workers had only been cleared to work in plantations, the service sector, and in construction.

It helpfully added that it could only 'advise', hinting that the real power - meaning the issuance of the visas - lay with the Home Ministry. To allay the outrage, the Home Minister quickly stepped in and said that all the visas would be revoked. And so the matter ended.

Or did it?

What the reports did was to flag a compelling reason to continue to want to bring labour in - money. There are, apparently, 250 'outsourcing' companies that are 'allowed' to import labour and every worker has to pay RM9,000 to RM10,000 (S$4,057-$4,508) for the privilege which, by the way, is a princely sum in Bangladesh, Indonesia or India, for that matter.



Meanwhile, the 70,000 Bangladeshis alone would have paid a gross RM630-700 million in commission income to the agencies. Even after netting off levy and visa fees, that isn't peanuts.

On a macro-picture, it gets positively stupendous. Officially, there are around 2.5 million foreign workers in Malaysia, meaning the agencies would have raked up gross takings - over 20 years when immigration really got started - of nearly RM25 billion! No wonder, there are 250 of them now and no one wants to stop the gravy train.

The Ministry of Human Resources may wring its hands now but the same ministry said last year it was committed to 'progressively reducing' foreign labour. All this while, the Home Ministry seems made of Teflon.

In the 1990s, the construction sector said it would use foreign labour as a temporary sop while it trained locals to fill the gap. Now the locals aren't mentioned: it just says the industry will 'stop' if foreign imports stop.

What is 'outsourcing' anyway? Usually, it refers to the way in which processes - skilled stuff like product design or manufacturing - are sub-contracted to a third-party company in another country to cut costs or to increase efficiency. And it benefits the host country with consequent rising living standards. India is a prime example.

Now take us. Our 'outsourcers' bring in low-skill, low-wage people - after making them pay, in relative terms, a lot - as a cheap narcotic for our industries. Costs aren't kept down by efficiency increases but by artificially depressed wages.

Don't get us wrong. Foreign labour has, indeed, contributed to Malaysia. And it has enriched their host countries through annual repatriations (RM9-10 billion a year).

But they have come in such numbers that it has near- swamped the health care services and romanticised Malaysia to an extent that illegals routinely risk their lives coming here.

The good news is that all this is known. The bad news is that it has spawned nothing but bland cliches and occasional bouts of action. Last week saw a perfect example of both.