Koon Yew Yin
20th April 2016

Recently there was a news report that the serious shortage of labour has caused 14 furniture manufacturers in Johor to close shop. According to Malaysian Furniture Council president Chua Chun Chai, the furniture industry in the peninsula is facing a shortfall of some 35,000 workers. This situation has caused 300 furniture makers and workers in Bakri, Muar to demonstrate and putting up banners proclaiming “No foreign workers = end of the industry”.

According to Mr. Chua, the foreign worker recruitment freeze had dealt a heavy blow to the foreign labour-intensive industry. The hardest-hit states are Johor, Selangor and Penang which together produce 95% of the total furniture the country exports, he said, adding that the biggest markets for Malaysian furniture are the US, Japan, China, Australia, the UK, India and United Arab Emirates.

“Last year, Malaysia’s furniture export hit RM9 billion, which was 14.1% more than the 2014 figure. “If not for the freeze on recruitment of foreign workers, we were looking at breaching the RM10 billion mark this year. But with a shortage of labour we are facing, the export is expected to shrink greatly. “As such, the council is appealing to both the prime minister and deputy prime minister to look into our predicament seriously,” he said.

Actually, the problem of shortage of foreign workers as a result of the recent freeze is not confined to the furniture industry alone. Practically every sector of the country’s economy is dependent on foreign labour.

It is not just the private or business sector. It is true even of the civil service, especially the GLCs that are involved in the agricultural sector where the great majority of workers are foreigners.

If the Government were to conduct a survey of business leaders in the private sector and GLCs on the subject of the freeze, I can bet my bottom dollar that there will be an overwhelming number of respondents calling for an end to the freeze.

I can also guarantee that the oil palm plantations as well as the downstream industries including the refineries associated with the commodity will grind to a halt if the Government was to stop foreign workers from working in the industry.

Palm oil is found in absolutely everything from food and household products, to make-up and other cosmetics. One in ten products found on our supermarket shelves today contain palm oil. Palm oil is also being widely considered as being an alternative to the natural fossil fuels that are rapidly running out, primarily being used as a form of biofuel in the transport industry.

How are we to compete and sell our Malaysian oil palm products without foreign workers?

World Bank’s Policy Advice for Malaysia

Even the World Bank has felt sufficiently concerned by the Government’s new anti-foreign labour policies to sound a serious warning. This is what its latest Economic Monitor report on the country released in December last year has to say:

Malaysia’s relatively open immigration policy has reinforced Malaysia’s conducive business environment, making it a very attractive investment destination. The report finds that low-skilled immigrants can create additional jobs by filling workforce gaps not filled by Malaysian workers, reduce production costs, help expand output and exports, and raise the demand for both unskilled employment and higher-skilled Malaysians. Economic modelling suggests that a 10 percent net increase in low-skilled foreign workers may increase real GDP by up to 1.1 percent. Also, for every 10 new immigrant workers in a given state and sector, up to five new jobs may be created for Malaysians in that state and sector, two of them female.

What the Bank report is saying in simple English is that an increase in foreign workers will not only help the country push up our national income but will also help generate more jobs.

Actually if surveys are conducted on the relative efficiency and value of foreign labour compared with our own home grown one, most employers will probably say that the foreign worker will win hands down. This is especially true of the 3 D jobs – that is, dirty, difficult and dangerous jobs.

Our young workers – not to mention, middle aged and old ones too! – prefer to work as bosses in easy, safe, comfortable jobs preferably in an air conditioned environment. They also want to be paid much more!

The advice I would like to provide the Government on the foreign worker freeze policy is: Let us not cut our nose to spite our face.