06/13/2022, 14.30
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Labour shortages threaten Malaysia’s economy

by Steve Suwannarat

In 2019, Malaysia had some two million foreign workers, mainly from Indonesia, Bangladesh and Nepal. Now labour shortages are threatening the palm oil, semiconductors and the fisheries sectors. Red tape and costs associated with immigration are among the main obstacles to recruitment.

Kuala Lumpur (AsiaNews) – Life for immigrants in Malaysia has become tougher as certain political groups ramp up nationalist sentiments in a country where managing a large foreign labour force is proving more complicated.

The situation is such that the US State Department has ranked the country among the worse in terms of the exploitation of and lack of protection for immigrant workers. US authorities have also banned seven Malaysian companies from the US suspecting them of using “forced labor”.

In Asia, Malaysia is among the nations most dependent on foreign labour. In 2019 about two million workers, 20 per cent of its workforce, came from abroad, mostly Indonesia, Bangladesh and Nepal, employed in key sectors such as agriculture, semiconductors and fisheries.

However, recruiting foreign workers is hampered by lengthy procedures and high costs, plus uncertainties over responsibilities and tasks that are not always clearly defined.

Malaysia’s Ministry of Human Resources for example has approved just over 2,000 applications for immigration, this despite the lifting of the immigration ban in February and demands from Malaysian companies for some 475,000 foreign workers. Many applications were rejected for incomplete information or lack of compliance with regulations.

The situation has led to frictions with the countries of origin of many migrants, who fear that new rules are unclear and more onerous, making the immigration process more time-consuming and costly, thus increasing the debt burden on would-be migrants.

On 31 May, Indonesia, a key partner for Malaysia, decided to scrap plans to send its own citizens to work on Malaysian oil palm plantations. The decision blocked 164 skilled workers from the island of Lombok, who were supposed to board a chartered plane to Kuala Lumpur.

Misunderstandings over immigration and employment rules are probably behind the move.  This is a serious blow to Malaysia’s palm oil industry, which contributes 5 per cent of the country’s economy.

As sunflower oil exports from Ukraine are in jeopardy, Malaysia finds itself unable to expand its own exports because of labour shortages caused by rigid rules that have effectively stopped immigration.

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