PETALING JAYA: Stricter enforcement against the abuse of social visit passes (SVP) by foreigners could drive more businesses into the informal economy unless Malaysia undertakes reforms to its legal foreign worker recruitment framework.
Malaysian Employers Federation president Datuk Dr Syed Hussain Syed Husman (pic) said that while the abuse of SVP, such as foreigners engaging in unauthorised business or informal economic activity, is a legitimate enforcement concern, over-emphasising the issue risks treating symptoms rather than addressing the root causes of workforce irregularities.
“Businesses, particularly micro, small and medium enterprises operating in labour-intensive sectors, are ultimately driven by operational necessity.
“Where the process of recruiting foreign workers through lawful channels remains administratively complex, time-consuming and cost-intensive, a purely enforcement-centric approach may inadvertently restrict opportunities for compliant hiring without providing viable alternatives.
“In such circumstances, some firms may not necessarily be acting in deliberate defiance of the law but are instead responding to immediate manpower shortages that threaten business continuity,” he said when contacted.
Syed Hussain added that intensified action against irregular work arrangements without concurrent improvements in approval timelines, quota flexibility and onboarding procedures, could backfire.
It may drive firms towards subcontracting with opaque labour practices, expand informal employment, and increase reliance on undocumented or unregulated workers through intermediaries, he said.
On Feb 12, Home Minister Datuk Seri Saifuddin Nasution Ismail said firm action would be taken against the misuse of SVP by foreigners.
He said the ministry had identified several cases involving SVP abuse, including illegal entry, overstaying and foreigners conducting business activities by partnering with local individuals and operating under locally registered licences, despite not holding valid business passes.
Syed Hussain said enforcement should also not disproportionately target foreign passport holders, but instead dismantle the enabling structures that facilitate abuse.
He said irregular cases are often enabled by local sponsors, unlicensed labour agents or proxy ownership structures.
“A foreign national acting alone has limited capacity to formalise any business activity without local participation in areas such as licensing, premises rental or company registration,” he added.
He also called for clearer, sector-specific guidelines to help businesses distinguish between legitimate investors and irregular operators.
He added that ambiguity in current rules leaves companies uncertain about whether foreign individuals are acting within permissible investor roles or inadvertently breaching immigration conditions.
“Well-defined and industry-aligned guidelines would not only enhance legal certainty for businesses but also reinforce voluntary compliance by reducing interpretative grey areas,” he said.
