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Malaysia may look into stopping the use of third-party agents to recruit foreign workers

Malaysia may look into stopping the use of third-party agents to recruit foreign workers

This is due to the higher cost involved in doing so, said Prime Minister Datuk Seri Anwar Ibrahim, as he urged to put a stop to this practice.

As spoken in a press conference on 8 February 2023, Prime Minister Datuk Seri Anwar Ibrahim is looking to find ways to stop the use of third-party agents to recruit foreign workers for Malaysia.

This is due to the higher cost involved in doing so. As an example, PM Anwar cites how foreign workers from Nepal cost about RM3,700 per person, as compared to foreign workers from Bangladesh and Indonesia where third-party agents are used that involve a cost of between RM20,000 and RM25,000 for each foreign worker.

According to PM Anwar, this goes beyond the matter of increasing wages, but exorbitant agent fees is tantamount to what is now known as "modern day slavery".

In the meantime, the Ministry of Home Affairs (MHA) will be monitoring the situation to allow for ease of registration for foreign citizens in Malaysia without the use of agents.

The Malaysian Employers Federation (MEF) has responded to PM Anwar's statement, calling it a "timely decision" as employers are currently faced with many other challenges in managing the costs of doing business.

MEF President Datuk Dr. Syed Hussain Syed Husman P.J.N., J.P. commented: “The decision to stop using the services of third-party agents will involve total costs savings of about 80% of the current costs of bringing each foreign worker from the source countries.”

According to him, the reduction in costs in bringing foreign workers to Malaysia will resolve one of the major indicators of forced labour facing Malaysian employers — debt bondage of foreign workers when they come to Malaysia.

"MEF hopes that the new policy of ending the use of third-party agents to recruit foreign workers will be implemented as soon as possible so that the efforts by employers to recover their businesses will be on track and the nation be on the right momentum for the targeted GDP growth of between 4% and 5% for 2023.

Due to the involvement of third-party agents the workers are forced to take high-interest loans or mortgage their properties to pay for the high recruitment fees, thus putting them into “debt bondage." 

High recruitment fees charged by third party agents have long been the major cause for increased costs for foreign workers that want to work in Malaysia. Under the zero-cost recruitment fees, several local glove manufacturers have reimbursed their existing and former foreign workers for these recruitment fees they paid to the recruitment agents in the source countries.

Instead, Datuk Dr. Syed Hussain believes the intake of foreign workers should be done on Government to Government (G to G) basis to ensure that the interests and welfare of both employers and foreign workers are safeguarded.

“Since employers are still facing shortages of foreign workers, MEF recommends to the Unity Government to allow employers to formally recruit refugees that hold valid UNHCR refugee cards.

"These refugees are already in the country comprising many skilled and unskilled refugees. MEF hopes that the Unity Government will consider allowing refugees to work in sectors locals do not prefer. Allowing the refugees to work will not attract travelling costs as they are already in the country and they will formally be required to pay the necessary taxes to the authorities.”


Photo / Prime Minister Datuk Seri Anwar Ibrahim Facebook

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