Prime Minister Dr Mahathir Mohamad acknowledged today that a mass expulsion of illegal immigrants had hurt Malaysia's construction industry but indicated that employers must now be prepared to pay the relatively higher costs of legal workers.

Asked whether employers were holding the government to ransom by forcing it to reverse a decision on immigrants, Mahathir told reporters there was no reversal but "if they want to have (foreign labour) they must only employ legal ones, so they'll have to pay."

The government would not penalise employers who had in the past used illegal labour because "we'll penalise ourselves ... the construction industry is not moving," he was quoted as saying by the official Bernama news agency.

Illegal Indonesian immigrants made up 70 percent of the building industry's 500,000 foreign workers before a crackdown in recent months, according to the Master Builders Association of Malaysia (MBAM).

Many of them were among the more than 380,000 people who left for home during a four-month amnesty ahead of the introduction of tough new penalties for illegal immigrants which came into effect on Aug 1.

Indonesians preferred

Two weeks later, after property developers warned that building sites were grinding to a halt and project delays would cost millions of ringgit, the government reversed a ban on the recruitment of Indonesians for the construction sector.

That ban had been imposed in February after two riots by Indonesian workers, but had no visible effect until the mass exodus of illegal immigrants, which was a separate issue affecting all nationalities.

The government had ordered that builders in this relatively-developed southeast Asian economy should recruit workers from countries such as Burma, Cambodia, Laos, Vietnam and the Philippines.

But contractors have made it clear that they prefer the Indonesians, saying they are skilled, share a similar language and culture to Malaysians and are the only workers prepared to put up with the tough conditions on construction sites.

While the government may claim that at least its expulsion of illegal immigrants will now see new recruits employed on a legal basis, industry sources say privately that bureaucratic paperwork and two-year contracts make legitimate employees a burden.

Illegal immigrants on the other hand are prepared to work on a daily basis as and when needed, and thus cost less than legal workers - a point which Mahathir appeared to acknowledge in his remarks Tuesday.

Heading back to Malaysia

This suggests many Indonesians, faced with high levels of unemployment at home, will soon be heading back to Malaysia illegally, although both they and their employers now face a mandatory six months in jail and possibly up to six strokes of the cane.

But even if the construction industry takes the legal route, damage has already been done, according to MBAM vice-president Patrick Wong.

He said after the ban was lifted that the industry would still be hit by a slowdown over the next few months.

"Workers will trickle in and the industry will only get back to its productive pace in about six months," he said. AFP