Foreign worker migration overhaul

Billion-ringgit deals: Observers say the revamp of the foreign workers migration industry should not lead to a monopoly and that contracts should be given out in a transparent manner.

Contracts worth billions of ringgit under review

THE management of foreign worker migration processes has long been a contentious issue largely because of many unnecessary layers and costs.

Rendered helpless, the biggest victims are often the workers who, based on official data, already number more than a million in the country.

Currently, there is a foreign worker centralised management system (FWCMS) that monitors the entries of foreign workers.

This has been implemented and managed by Bestinet Sdn Bhd, a company which has supposedly put into place a single platform of eight parts, which integrates all the necessary services for foreign worker migration.

Although a private firm, Bestinet, said to be closely linked to Umno leaders, hardly needs introduction. It is synonymous with being a dominant player in the foreign worker segment and more recently was mired in a controversy involving Nepali workers.

Recall, it is currently facing accusations of being involved in a scam which saw it allegedly net millions of ringgit from thousands of Nepali workers in the past five years.

Bestinet has denied the allegations.

Bestinet, which was once suspended by the Immigraton Department in 2015, is controlled by one Datuk Mohd Amin Abdul Nor, believed to a Bangladeshi.

Sources say the company has been given a six-year concession period to manage current foreign worker migration processes and the concession started from January this year.

According to industry sources, of the eight modules on the FWCMS, about half are not active and instead, these portions have been carved out and outsourced to private vendors, thereby duplicating procedures unnecessarily, including costs.

Interestingly, the private vendors are said to be closely linked to a former minister.

Industry sources have estimated that the collection from foreign worker migration processes to be RM1.2bil per year.

New proposals?

Following the formation of a new government post May 9, there have been talks of a revamp in the entire foreign worker ecosystem.

In August, Prime Minister Tun Dr Mahathir Mohamad said the government would be forming an independent committee chaired by either a top government official, former judge or secretary-general, under the Institute of Labour Market Information and Analysis.

This is to allow an overview on the policies and management of foreign workers, according to Dr Mahathir.

Additionally, sources now say that there have been fresh proposals by multiple parties wanting to handle the management of foreign worker recruitment processes.

Some of the quarters claim that they can reduce the RM1.2bil figure to RM500mil.

One of this parties is said to be local private group, S5 Systems Sdn Bhd.

On its website, S5 says it “is a global integrated security solutions provider, delivering real solutions and quantum-leap advances to both governments and enterprises.”

Checks with the Companies Commission of Malaysia reveal that the directors of S5 are Syed Mohammad Hafiz Syed Razlan (appointed July 13 this year) and Heng Chiang Pooh (appointed July 10, 2007).

It is worthwhile to note that there have been two resignations at S5 post the 14th general election (GE14).

One of them is Datuk Seri Johann Young who resigned as director on July 14, the second being Tan Sri Mohamed Al-Amin Abdul Majid, who gave up his directorship on June 21.

Another firm that has submitted a proposal is Conceptway Solutions (M) Bhd.

Currently, there are too many players in the immigration ecosystem. They include private and several listed firms.

Ultra Kirana Sdn Bhd is another company which has been in the news lately.

What transparency?

As one observer puts it, the entire immigration ecosystem is a “little too messy”.

The revamp of the migrant workers industry in Malaysia should not lead to a monopoly and contracts given out to companies processing foreign worker applications should be carried out in a transparent manner, according to industry observers.

Over the last few decades, Malaysia’s dependence on unskilled foreign workers have created a billion-ringgit industry especially around their recruitment, but not without controversy.

The crux is the complexity and lack of policy clarity around the industry. There are issues of vested interests, human trafficking, and rent-seekers who are said to leech off the labour licensing procedure.

“The current rules are opaque and there is a mixed level of enforcement.

Low-skilled: A lucrative industry has developed around the recruitment of foreign workers because Malaysians continue to shun 3D (dangerous, dirty and difficult) jobs which are also low-paying.
Low-skilled: A lucrative industry has developed around the recruitment of foreign workers because Malaysians continue to shun 3D (dangerous, dirty and difficult) jobs which are also low-paying. 

“This has resulted in high costs, which often require hiring companies to turn to external agencies which can be very expensive,” Institute for Democracy and Economic Affairs (Ideas) director of research Laurence Todd tells StarBizWeek.

A lucrative industry has developed around the recruitment of unskilled foreign workers because Malaysians continue to shun 3D (dangerous, dirty and difficult) jobs which are also generally low-paying.

However, while there are regulations to oversee the industry, they are often complicated and poorly-enforced, according to Todd.

“This is partly because many people have benefitted from the status quo and existing loopholes. Ultimately this is affecting normal businesses, and should be addressed,” he says.

Following the historic GE14, the Pakatan Harapan government has decided to streamline the policies and management of foreign workers in the country.

Dr Mahathir has also indicated the need to put in place a proper policy for foreign workers.

But if a restructuring of the industry is being considered, it should not lead to a monopoly, says Sunway University Business School’s Prof Yeah Kim Leng.

“There should be more stringent criteria imposed on the service providers selected on the basis of competitive bidding and strict screening as well as compliance of standards in the recruitment process,” he points out.

Ideas’ Todd concurs saying that in all areas of procurement there should be open, competitive bidding to avoid “poor contracts” which harm the interests of taxpayers and the economy in the long run.

At the policy level, AmBank Group chief economist Anthony Dass says the dependence on foreign workers has to be examined and reviewed periodically to send the message to industries on what the priorities and directions are.

Highly-skilled workers

Bank Negara, in a March analysis, noted that Malaysia is among the countries with the highest ratio of migrants to total population in Asia-Pacific.

Most of the migrants have low education, with only about 5% of them being tertiary-educated.

In contrast, other economies like Australia, Singapore and Hong Kong have intentionally planned to attract more skilled foreign workers, says the central bank.

For the country to move towards a developed nation status it has to wean off its reliance on low-skilled migration for a more “high-productivity, high-income” workforce, say industry observers.

According to Dass, a clear policy will help the immigration department in regulating and managing the inflow of foreign workers, standards to be observed by employers, and the implications of having the workers here.

The good news, he says ,is that Malaysia is now focused on highly-skilled talents.

“It is better for the economy to import professionals and highly-skilled foreign workers rather than import a few million low-skilled foreign workers.”

Under the 11th Malaysia Plan, there is a target to limit total employment of foreign workers to not more than 15% or about 2.3 million of the total workforce by 2020.

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