Economy Case

As a country that is developed rapidly, Malaysia required to hire foreign workers on order to reach the mission in 2020 by striving towards becoming a developed country. Currently, there is about 2 million of foreign workers in Malaysia, that is about 13% of the labor force in the country (Economic Report 2006/07). For legal foreign workers there is about 1.2 million from the total number, whilst about 800,000 are illegal foreign workers. Most of the illegal workers are Indonesian. The sectors which employ numerous numbers of foreign workers consist of construction services, plantation and manufacturing. Also, there are many workers work as domestic maids (Rupert 2003, Economic Report 2006/07). The jobs that are usually choose and taken by the foreign workers are the jobs that are physically demanded by those workers and are shunned by most Malaysians.

Undeniable, the influx of foreign workers will indirectly affect and have an influence on the economy of Malaysia. The impact has negative effects towards the country. One of the impacts is influence the employment opportunities of local citizens. The foreign workers who work in Malaysia have a very low reservation wage as they come from less developed countries. For instance, in Indonesia, an Indonesian man will only get RM6 per day for working as a laborer in the paddy field for eight hours. Consequently, Malaysia wage rate will be depressed to a very low level due to the unrestricted entry of foreign workers (MTUC 2005). For employers, low wage rate is advantageous for them as they only need to pay low wage to hire labors. However, for Malaysian workers, a low wage rate is a bad news for them as this is out of their expectations. Hence, to gain a better employment opportunities, Malaysian tend to seek their jobs abroad. For instance, many of the Johoreans work at Singapore and they commute daily to there, resulting traffic congestion at the causeway every morning. An estimation of 300,000 Malaysians choose to work abroad due to the high wage rate.

On the other hand, the foreign workers sent high remittances to their home countries is another perceived bad impacts. In 1995, there is about 4.5 billion ringgit was remitted to Indonesia alone. Besides, there is another form for monetary loss to Malaysia as illegal entry is also related with the smuggling of foods into Malaysia from neighboring countries. Such activities deny the government revenue in terms of import duties. Foreign workers are considered as free-riders in the Malaysia economy as they no need to pay taxes and user fees while enjoying public goods. They are ensured health and other facilities without corresponding payments. Due to the continue increase of demand by the foreign workers, they are responsible for the higher rate of inflation.

Besides that, foreign workers have contributed negative impacts on construction industry. Nowadays, there is a high demand on construction activities in Malaysia society due to the growth of economic and increase in standards of living (CIDB 2005). Consequently, there is a need to hire numerous numbers of foreign workers in construction industry