1.0 will choose to employ foreign workers so that

1.0  Introduction

paper discusses impact of foreign workers in Malaysia, factor that affect the
employment of foreign workers and finally the solution to overcome the impact
by foreign workers. Foreign workers known as an individual who is temporary
employed in a country which that individual is not citizen. According to Miller
Mark J. (1991), foreign worker defined as a person who comes from tumble of
nationality groups, working with different legal status in a country. Foreign
workforce is known as foreign nationals where they are recruited from different
country and legal to work in a country described by A.H.M. Zehadul Karim et al.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!

order now

parties in various industries like construction and manufacturing industry
concern about the increasing number of foreign workers in Malaysia recently. Nowadays,
because of the local workers not interest in construction and manufacturing
sector. The Malaysian construction and manufacturing industry have been
encountering deficiency in workforce. Hence contractors will choose to employ
foreign workers so that to fill up the vacancy in construction and
manufacturing sector. This will contributes of the large increment of amount of
the foreign workers.

number of foreign workers in the fourth quarter of 2007 increased to 10.99
million as compared to 10.73 million in third quarter of 2006 according to
Labour Force Survey Report. There were 1.84 million registered foreign workers
in Malaysia, of which 33.3 percent were employed in manufacturing and 15.1
percent in construction. (Bernama, 2006). This is because Malaysia is still
rely on foreign worker especially from ASEAN region.


worker in construction industry    

           Malaysia was a receiver
of foreign national in the nineteenth century especially from China, India and Indonesia who came to work
in construction, plantations and mines sector (Lee and Sivananthiran, 1996;
Kaur, 2010; Dannecker, 2005). This shows that strong recruitment of foreign
workers in construction sector is not a new phenomenon in Malaysia. There are
approximate 22 million are ethnically diverse, 57% are Malays including
bumiputera, 24% of Chinese, 7% of Indians and the rest known as other races
like Indonesian, Filipinos, Bangladeshis 
(Andaya, L.Y. and Andaya, B.W. 2001).

Government of Malaysia has objectives which are providing the job vacancy and
improving the income of the local population. This is to show that government
plays the important roles in the construction sector. Nowadays, the
construction sector has been experiencing a shortage of workforce due to local
workers are unable to fulfil the demand of the construction market. Construction
industry is the industry that need huge number of workers described by Ahmad, K
(2009). If the economic development especially construction sector in the
neighbouring countries like Indonesia continues to lag behind Malaysia, the
inflow of foreign workers will continue to happen as long as there is demand
for foreign worker in Malaysia.

worker in manufacturing industry

concentration on manufacturing is suitable because the other sectors like
agriculture and construction where foreign workers focus, are widely perceived
to offer low income jobs with tough conditions of work that local workers.
Manufacturing paid relatively higher pay and 
comfortable working environment. Therefore, the employment of foreign
workers increase and this will give the negative impact to the local workers.
This also leads to unemployment rate in Malaysia increases.

           In 1990,
only 8.8% of foreign workers were in manufacturing, where 37.7% are in
agriculture, 34.4% in construction and 19.1% in non-domestic services whereas
in 2009, 32% are in manufacturing far exceeding their presence in sectors traditionally
avoided by natives such as 26.1% in agriculture , 15.6% in construction and
non-domestic services is 10.6%.  (Devadason
and Chan, 2014)

transformation of Malaysian economy from an exporter of main commodities
consisting of tin and rubber to a major supplier of synthetic goods, mainly
electric and electronics products are acknowledged within the development literature
(World Bank, 1993). The new emphasis within the business improvement policies
naturally ended in restructuring within production. In 1970, foods and drinks,
wooden merchandise, and chemical and petroleum products accounted for 64% of
synthetic exports, at the same time as the electronics and electrical goods
(EE) supplied a mere 3%. In 1989, this had changed dramatically with the EE subsector
alone accounting for 52% of the manufactured exports (Anuwar, 1992: 28).



2.0  Problem

          The employment of
foreign workers has caused many problem in Malaysian construction industry. Firstly,
local employers will prefer foreign workers than local worker due to employ
foreign workers are much cheaper than local workers. Besides that, Malaysian
economy grew rapidly. Moreover, foreign workers are willing to work overtime
and finally working environment in any sectors.

that influence the employment of foreign workers in construction and manufacturing

            The first factor that influence the employment
of foreign workers is local employer prefers foreign workers which is cheaper. Malaysia
presently has approximately 1.8 million foreign employees and on the same time,
local employers are submitting a huge number applications about hiring foreign
workers to the home Affairs Ministry stated by Former Minister of Human Resources,
Datuk Seri Dr Fong Chan Onn (Bernama, 2006). Foreign workers are willing to
accept lower wages and this will lose local workers’ interest in construction
and manufacturing field. This mean that the wages of local workers have to same
as foreign workers. Malaysia will remain to face a labor shortage if it does no
longer deal with its foreign workers laws and raise the minimum wages paid to
Indonesian workers (The New Straits Times Press (Malaysia) Berhad, 2010). This
is why the employers hired these foreign workers so that able to reduce the
employers’ expenditures if they pay lower wages to foreign workers.

Malaysian economy grew rapidly. According to Trading Economics, The Malaysian
economy advanced 6.2% year-on-year in the September quarter of 2017, compared
to a 5.8% increment within the preceding three months and beating market consensus
of a 5.4% growth. It was the strongest growth since the June quarter 2014,
boosted by robust private consumption and faster rises in government spending,
investment and exports. On the production side, the manufacturing sector
increase 7.0%, after growing 6.0% in the June quarter. Meanwhile, the construction
sector grew by 6.1% (after a 8.3% rise in Q2). The agriculture sector grew by
4.1%, compared to a 5.9% increase in the June quarter. Increase in GDP in
Malaysia will create more job vacancies to local and foreign workers.

Next, foreign workers are willing to work overtime. The standard working
week should be 44 hours and working over 44 hours regarded as overtime (CIDB Singapore
1994c). Local worker request extra wages if they asked to work overtime but
foreign workers will not request extra wages.

Other than that, working environment also a factor that need to
considered. The construction sector considered as dangerous, dirty and
difficult working environment .Local workers not willing to work in that
mentioned working environment. Foreign workers do not care about this
environment and dare to take risk on construction area. This is the reason that
employer preferred foreign workers than local workers.

on employment of foreign workers

first impact that induced is the safety of the local society is threaten by
foreign workers. The huge number of foreign workers is looked as a security threat
as it is associated with rising crime rate and contagious diseases (Kanapathy,
2008). Besides that, there are other social problems like drugs addiction,
prostitution, burglary and many more. The foreign workers  have not only flooded the local employment
market, but they are also filling up our prison and detention centers all over
the nation said by the ministry of Internal Security. Therefore it is normal
that if Malaysians feel afflictive with their presence (Bernama, 2007) and this
will disturb social balance in Malaysia.

Besides that, local employers will be more rely on foreign workers,
escalating of the number of foreign workers will affect high unemployment rate
of local workers because foreign workers have substituted for local workers in
construction and manufacturing sector. Employers feel satisfied having foreign
workers working in their company and local workers feel stress because they
have to compete with foreign workers if they want to survive in either construction
or manufacturing sector. Sooner or later, it ends up with locals’ lower
purchasing power, resulting leaves some negative impacts to Malaysia’s economy.
Chew (2005) worried that our country is highly dependent on a single country
which is Indonesia, it is the main source of labor for around 65% (Kanapathy, 2008;
Kaur, 2010) or 62% (Department of Statistics Malaysia, 2010) from overall
foreign workers in Malaysia. Another issue shows that Malaysia is highly depend
on foreign worker which is like around 90% of the foreign workers in
agriculture sector are of Indonesian origin in Sabah (Kassim, 2005). The
problem may occur if diplomatic relations between Malaysia and Indonesia become
strained and Indonesia ordered on their nationals back (Kassim, 2005) and
adversely affect the construction industry in Malaysia.

slow pace in technology advancement will happen in Malaysia. One of a challenges
that the Malaysian construction sector faces is productivity caused by the
foreign workers. Most of the foreign workers employed were unskilled, low
education level which will decrease the quality and productivity of work in
construction sector. (Han et al. 2008). Due to lack of experience and knowledge
of the foreign workers, this will produce low standard and quality of
productivity in construction sector. In addition, some of them cannot execute
the work perfectly based on the instruction given by their employers and also
did not have enough practical training in Malaysia or their origin country.

Moreover, local community difficult to accept someone from different
culture or ethical motive especially in construction or manufacturing sector.
For instance, if local workers are working together, it will easier for them to
cooperate and understand to each other but if an employer wants to employ
foreign worker from another country then the local workers have to learn the
international language which is English (Chitra Reddy, 2016). The main problem
that foreign workers are facing now is language according to Toh. R. (1993).
Company must set up a standard language like English or Malay in work so that
the information are delivered to the workers clearly. The manager in company must
pay attention to their employees like giving them the basic language class
especially for low-skilled foreign workers.


to minimizing the negative impact

the problems exist, there are many ways to solve it if the government and local
community cooperate to confront it. Although employing foreign workers have
leave many negative impacts to Malaysia but all parties have to take the stern
action so that to solve the entire problems. There are some solutions to
overcome the problems like Malaysian government impose levies, change migration
policies, campaign influence local workers to join construction and
manufacturing industries and introduce vocational school system.

first solution is vocational school education system needed to be review in
Malaysia. The basic skill such as wiring and welding should be learned by every
secondary students so that they will become more skillful in manufacturing
field in the future. Practical exam should be implemented in vocational course besides
written exam. This able to produced more local workers in construction and
manufacturing sector if the Ministry of Education take the action quickly. Employer
can considered local workers who graduated from professional vocational school
compared to low academic qualification of foreign workers. As a result, the
quality of work will be increased and Malaysia less dependent on foreign
workers from neighbouring countries.

next solution is Malaysian government impose levies and change migration
policies. During the recruitment of foreign workers, regulation must include
strict rules so that the number of foreign workers can be reduced. These
strategies can create more job vacancies to local workers to join the
construction sector because foreign workers have to go through many rules and
regulations that set by government, they will found that it is difficult and
many rules to obey when they want to work in Malaysia and finally they may give
up and enter another countries for job opportunities. For example, one of the
rules is only foreign workers are permitted to work in manufacturing,
construction, plantation, agriculture and services sector according to
Immigrant Department of Malaysia.

Other than that, strengthen the enforcement of existing Biometric
database system. The objective of this system is to control the number of
foreign workers in Malaysia. They must have their fingerprint taken and saved
in Immigration Database. This can prevent that the illegal foreign workers
re-enter Malaysia if they asked to back to their origin country or they leave
Malaysia if they commit crime. Government can control the number of foreign
workers based on the industry demand.

4.0  Conclusion

             In a nutshell, there are several factors like
that attract foreign workers to construction and manufacturing sector and also
leave some impacts to Malaysia. The study shows that employers employ foreign
workers because of employment of foreign workers is cheaper than local workers,
Malaysian economy grows rapidly and environment in construction sector.
Reliance too much of foreign workers may leave some impact like safety of the
local society is threaten by foreign workers, local employers will be more rely
on foreign workers, slow pace in technology advancement and finally local
community difficult to accept someone from different culture or ethical motive.
In order to overcome these impacts, Malaysian government must play some
important roles like government impose levies and change migration policies,
strengthen the enforcement of existing Biometric database system and vocational
school education system needed to be review. Although employment of foreign
workers may leave some problems, we as local community have to play important
roles so that the unemployment rate of local workers will be decreases in any
sectors. All parties including us must take action now so that the negative
impacts induced by foreign workers can be minimized at a lower level. In the
future research situation, we wish that study of impact of foreign workers to
be improved in order to minimise the number of foreign workers and Malaysians
are able to understand the important of local community in any sector in


Suresh Narayanan, Lai Yew-Wah (2014). Migration and
Development in Malaysia: The Impact of Immigrant Labour on the Manufacturing
Sector, 1986-2010. Universiti Sains Malaysia, Pulau Pinang.

Malaysia GDP Annual Growth Rate 2000-2017. Retrived
Dec 5, 2017 from https://tradingeconomics.com/malaysia/gdp-growth-annual

Mohd Arif Marhani, Hamimah Adnan, Har Einur
Baharuddin, Mohd Reza Esa, Ahmad Arzlee Hassan (2012). Dependency of Foreign
Workers in Malaysian Construction Industry. Built Environment Journal  Vol. 9, No. 1, 39-50. Universiti Teknologi
MARA, Selangor.

Hamzah Abdul-Rahmana, Chen Wang, Lincoln C. Woods, Shu
Fung Low (2012), Negative impact induced by foreign workers: Evidence in
Malaysian construction sector. Habitat International 36  433-443. University of Malaya, Kuala Lumpur
and Curtin University, Australia.

Ramesh Kumar Moona Haji Mohamed, Charles Ramendran
SPR, Peter Yacob (2012). The Impact of Employment of Foreign Workers: Local Employability
and Trade Union Roles in Malaysia. International Journal of Academic Research
in Business and Social Sciences October 2012, Vol. 2, No. 10. Universiti Sains
Malaysia and University Tunku Abdul Rahman.

Chitra Reddy (2016), Top 13 Advantages & Disadvantages
of Hiring Foreign Workers retrieved 31 October 2017 from