Malaysia firms turn down orders as migrant labour shortage hits
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[June 13, 2022] By
Liz Lee, Rozanna Latiff and Mei Mei Chu
KUALA LUMPUR (Reuters) - Malaysian
companies from palm oil plantations to semiconductor makers are refusing
orders and forgoing billions in sales, hampered by a shortage of more
than a million workers that threatens the country's economic recovery.
Despite lifting a COVID-19 freeze on recruiting foreign workers in
February, Malaysia has not seen a significant return of migrant workers
due to slow government approvals and protracted negotiations with
Indonesia and Bangladesh over worker protections, say industry groups,
companies and diplomats.
The export-reliant Southeast Asian nation, a key link in the global
supply chain, relies on millions of foreigners for factory, plantation
and service sector jobs shunned by locals as dirty, dangerous and
difficult.
Manufacturers, who make up nearly one-fourth of the economy, fear losing
customers to other countries as growth picks up.
"Despite the greater optimism in outlook and increase in sales, some
companies are gravely hampered in their ability to fulfil orders," said
Soh Thian Lai, president of the Federation of Malaysian Manufacturers,
which represents over 3,500 companies.
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Palm oil growers are at breaking point, said Carl Bek-Nielsen, chief
executive director of oil palm grower United Plantations.
"The situation is dire and very much like having to play a game of
football against 11 men but only being allowed to field seven," he said.
Malaysia lacks at least 1.2 million workers across manufacturing,
plantation and construction, a shortage worsening daily as demand grows
with an easing of the pandemic, industry and government data show.
Manufacturers say they are short 600,000 workers, construction needs
550,000, the palm oil industry reports a shortage of 120,000 workers,
chipmakers lack 15,000 and cannot meet demand despite a global chip
shortage, and medical glovemakers say they require 12,000 workers.
Malaysia's manufacturing Purchasing Managers' Index dropped to 50.1 in
May from 51.6 in April, barely remaining in expansion, as the sector
shed the most jobs since August 2020, according to data from S&P Global.
Chipmakers are turning away customers, locals are not interested in
working in the industry and many who do join leave in less than half a
year, says Wong Siew Hai, president of the Malaysia Semiconductor
Industry Association.
The palm oil industry, which contributes 5% to Malaysia's economy, warns
3 million tonnes of crop could be lost this year as fruit rots unpicked,
meaning losses of more than $4 billion. The rubber glove industry
estimates $700 million of lost revenue this year if the labour shortage
persists.
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![](../images/061322PIX/busine39.jpg)
A man unloads fresh fruit bunches of oil palm at the fruit
collection centre for smallholders in Banting, Selangor, Malaysia,
June 10, 2022. REUTERS/Hasnoor Hussain
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WORKERS' RIGHTS
Malaysia's Ministry of Human Resources, which is responsible for approving the
intake of foreign workers, did not respond to Reuters queries for comment on the
labour crunch and its economic impact.
In April, Minister M. Saravanan said companies had asked to hire 475,000 migrant
workers but the ministry had approved just 2,065, rejecting some for incomplete
information or lack of compliance with regulations.
Diplomats from Indonesia and Bangladesh, two of Malaysia's biggest sources of
foreign labour, told Reuters that workers' rights were part of the hold-up in
sourcing migrant workers.
Bangladesh signed an agreement in December to send workers, but implementation
was delayed after Dhaka protested Malaysia's proposed hiring process, citing
fears the plan could lead to increased costs for the workers and debt bondage,
said a Bangladeshi diplomatic source.
"Our main focus is our workers' welfare and rights," said Bangladesh's
expatriate welfare and overseas employment minister, Imran Ahmed. "We're making
sure they get standard wages, they have proper accommodation, they spend minimum
cost for migration and they get all other social security."
He told Reuters that Dhaka does not "want workers to end up falling into a cycle
of debt trap", adding that Malaysia wants to hire 200,000 Bangladeshi workers
within a year.
The United States has banned seven Malaysian companies over the last two years
over what Washington called forced labour.
Malaysia's Saravanan, who was in Dhaka early this month, said Malaysia had given
the Bangladesh government reassurances that it would ensure better salaries and
protection of workers' welfare. He has denied claims that the hiring process was
flawed.
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Saravanan said last week the government was finalising technical matters,
recruitment procedures and agreements with some source countries.
Indonesia's ambassador to Malaysia, Hermono, who like many Indonesians goes by a
single name, said concerns over worker protection came up in recent bilateral
talks.
($1 = 4.3880 ringgit)
(Reporting by Liz Lee, Rozanna Latiff and Mei Mei Chu in Kuala Lumpur, Ruma Paul
in Dhaka; Editing by A. Ananthalakshmi and William Mallard)
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