Labour shortage fears as Malaysia pushes ahead with plan to cut foreign workers

Malaysia is incentivising companies to turn to automation and hire more high-skilled locals

But many businesses say they still need low-skilled foreigners to do dirty, dangerous and difficult jobs that Malaysians shy away from

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A worker collects palm oil fruits at a plantation in Bahau, Negeri Sembilan, Malaysia. Companies still need low-skilled foreigners to fill such jobs. Photo: Reuters

Published: 1:18pm, 30 Oct 2019Updated: 3:57pm, 31 Oct 2019

Malaysia is trying to overcome its reliance on low-skilled foreign workers as it tries to move up the economic ladder. But that is hurting some key industries in the country.

The country aims to reduce the number of overseas workers by more than 130,000 in five years, while getting companies to hire more high-skilled Malaysians and turn to automation to become a more developed economy. Local businesses say they are doing so, but still need low-skilled foreigners to fill jobs harvesting palm fruits and doing laundry.

Small and medium sized enterprises – which made up 38 per cent of gross domestic product last year – along with manufacturers and plantations say they are facing labour shortages that could threaten their growth.

The biggest problem for SMEs is hiring enough workers to meet immediate sales orders, according to the Federation of Malaysian Manufacturers. A shortage of labour is also among the main challenges for the plantation industry, IOI Corp said.

While Prime Minister Mahathir Mohamad has given up his goal of turning Malaysia into a high-income country by next year, he is still pushing the economy to rely more on hi-tech industries and less on resources. Restricting low-skilled foreign workers, who officially account for 15 per cent of the labour force – the real number may be much higher – is one part of that move.

Malaysia isn’t alone in its struggle to navigate immigration policy to benefit the economy. Singapore is opening the spigots slightly for higher-skilled foreign workers, especially in prized financial technology jobs, while issuing fewer work permits for low-skilled roles such as in retail and hospitality. Similarly, Thailand has unrolled a “Smart Visa” to attract highly-skilled foreign labour across 10 targeted industries.