By Danial Dzulkifly
SHAH ALAM, Dec 5 — Malaysia must address its dependence on low-skilled foreign labour, which suppresses wages, lowers productivity, and discourages investment in innovation and technology, said former Bank Negara Malaysia governor Tan Sri Muhammad Ibrahim.
Speaking at the Dialog Shah Alam programme today, Muhammad, who is also University Selangor (Unisel) pro-chancellor, said while foreign labour has undoubtedly played a crucial role in supporting the nation’s growth, especially in the manufacturing, construction and plantation sectors, the overreliance has far-reaching implications.
“Overreliance on foreign workers has led to productivity stagnation. Easy access to low-skilled workers discourages investment in technology and innovation.
“This dependence hampers Malaysia’s progress towards becoming a high-income nation. For example, much of the country’s struggles to transition to higher earnings stem from business that rely heavily on the low-cost model.
“The issue of outward remittance is also concerning. Foreign workers send a significant portion of their earnings back home, which affects Malaysia’s balance of payments.
“This outflow, estimated at over RM40 billion, represents lost opportunities for local economic growth. If retained and reinvested domestically, these funds could significantly boost the economy through multiplier effects,” he said in his keynote lecture at the programme held at Unisel here today.
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Foreign workers wait in line to be tested for Covid-19 outside a clinic in Kajang on October 26, 2020. — Picture by REUTERS[/caption]
Another major issue is the suppression of wages, Muhammad said, especially for lower- and semi-skilled workers.
Without drastic policy changes, he warned Malaysia will continue to face structural unemployment as the economy will fail to produce high-value, meaningful jobs.
“We may say many domestic helpers and foreign workers come to Malaysia to earn a living, but in the future, don’t be surprised if many of our daughters and sons end up going to those economies and becoming a source of cheap labour for them.
“This problem is real. It may not be evident now, but if the necessary changes aren’t made, 30 years from now, this situation will occur,” he said.
Muhammad said to address these challenges, a comprehensive and urgent blueprint to reduce dependence on foreign labour should prioritise structural transformation, investing in technology, improving labour policies, and enhancing skills development for the local workforce.
“Painful adjustment is necessary for the good of our children. Malaysia’s reliance on foreign labour must be reduced.
“Failure to implement labour reforms or delaying this crucial transformation could lead to long-term, unimaginable damage to the culture and social cohesion of our society.”
The second edition of Dialog Shah Alam was held today, with the first edition held in 2019. It was halted during the Covid-19 pandemic.
