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Friday, February 12, 2016

Reliance on foreign workers - whose windfall is it?



After the shocker of a steep levy hike on foreign labour, Putrajaya must have thought that the news was not good enough.
The announcement on the additional 1.5 million workers from Bangladesh to the already six million foreign workers in Malaysia, will now easily outnumber our 6.5 million local workforce - in both the public and private sectors.
Never mind the fact that the reliance on foreign workers would entrench our 'middle-income trap’. Never mind the malaise of a low-skilled workforce that will perpetually cause our industries to always remain anaemic in the low value-added economy and unable to graduate to a higher income one, by virtue of paying higher remuneration based on productivity.
Never mind the penchant for Putrajaya to merely provide lip-service to end this perennial problem, as they are towards the very end of their overstay. Never mind about the much-bandied-around claims of Bangladeshis supposedly voting in the next GE14.
What this piece is wanting to highlight - with regard to this issue of foreign labour - is why do we need the involvement of agencies to recruit foreign workers? What I mean is the agencies on our side.
We can fully understand why the source country would have to use agents; they have to search, recruit, train and provide travel logistics for their workers. That cost is totally justified.
But the contention is why do we need agents over here on our shores? We could surely refer to the Human an Resources Ministry and its staff should we need to employ foreign workers for our factories, and such.
A lucrative business?
Putrajaya has already made billions on levies for such services. So, why the need for extra agencies - and with it, the extra costs?
Let us see what is really happening... For example, an Indonesian maid would cost between RM8,000 and over RM10,000 to recruit. If the annual levy (which goes to the government) is RM500 while the cost of recruiting them is about RM3,000 on the country of origin, where does the remaining RM6,500 go to?
Well, is the money going to the agencies that were awarded the approved permit (AP) to bring them in? Is it such a lucrative business?
So, whose windfall is it after all - the government, or entities called “cronies”?
It is a marvel and a scandal for Putrajaya to prolong such rent-seeking activities, and is surely adding to the overall cost of doing business. Worse still now, with the recent levy hike.
For donkey years, cronies of the Home Ministry (and for that matter, all ministries) have most likely enriched themselves from these APs. Little wonder, as it seems to be such a lucrative business for these middlemen - without much of value-proposition, mind you.
Again, this looks like a no-brainer kind of business and is totally misplaced in a downturn. The sooner we stop it, the better.
Besides energising our ministry to be more responsible - and perhaps to embark on some multi-tasking efforts to serve the business community - we have to indirectly weed out unnecessary cronies that are adding costs to doing business in Malaysia.
Crony practices and unfettered pandering to a rentier class - many types and classes - have indeed destroyed this country's competitiveness. We Malaysians merely perpetuate it at our own peril!

DR DZULKEFLY AHMAD is Parti Amanah Negara strategy director. -Mkini

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