MELAKA: Foreign recruitment agencies engaging directly with Malaysian businesses must be scrutinised immediately, says a business group.
In expressing concerns over the matter, Melaka Indian Chamber of Commerce and Entrepreneurship vice-president Datuk Ignatius Lourdsamy (pic) said the practice of companies bypassing local recruitment firms when hiring foreign workers is undermining the integrity of the labour market.
“Such practices not only weaken the local economy but also expose foreign workers to potential exploitation, including job scams,” he said in an interview.
Lourdsamy said when companies source workers directly through overseas agencies, foreign workers would be deprived of adequate legal protection.
He said local employment agencies were required to obtain a “Licence C” from the Human Resources Ministry to legally supply foreign workers.
“However, foreign agencies do not hold such licences,” he said.
This, he explained, created unfair competition within the industry as local agencies must meet strict licensing requirements such as maintaining operational premises and providing a bank guarantee of RM250,000.
“In contrast, many foreign agencies operate without these obligations, giving them an unfair advantage in the market,” he said.
Lourdsamy also said the situation was further exacerbated by the absence of a proper quota system and the lack of restrictions on recruitment allocations.
As a solution, he proposed a structured framework where each licenced local agency would be granted a quota to recruit 1,000 foreign workers annually.
“Agencies with foreign shareholding should be limited to half that number.
This approach can create a level playing field and support Malaysian-owned firms,” he said.
He also urged stakeholders to consider the loss of government revenue, resulting from the activities of unregistered foreign agencies, which are not subject to Malaysian taxation.
“These lost revenues could otherwise contribute to infrastructure development, social programmes and national economic growth,” he said.
Lourdsamy said foreign agencies must be compelled to register locally and comply with mandatory taxation requirements.
“A structured taxation regime would ensure all recruitment agencies contribute fairly to national development,” he added.
