Foreign worker exodus hits Sabah SMEs, SMIs hard
Joe FernandezPublished: Nov 20, 2010 8:40 AM | Updated: Nov 20, 2010 9:24 AM
The continuing exodus of foreign workers from Sabah is hitting local industries, particularly small and medium industries (SMIs) and small and medium enterprises and (SMEs) where it hurts the most, according to the Federation of Sabah Manufacturers (FSM).
The continuing exodus of foreign workers from Sabah is hitting local industries, particularly small and medium industries (SMIs) and small and medium enterprises and (SMEs) where it hurts the most, according to the Federation of Sabah Manufacturers (FSM).
“They face certain closure if no quick solutions are found,” said FSM president Wong Khen Thau.
The foreign workers, the FSM says, are mostly making a beeline for the booming oil palm industry in neighbouring Kalimantan which is facing a labour shortage. No firm estimates are available on the number of jobs in Sabah, but they are estimated to be 50, 000, if not more.
“The situation should be viewed with concern and not allowed to escalate as they could otherwise cripple industries,” said Wong. “External factors negatively affecting industries are beyond the control of industrialists.”
He was elaborating on his remarks at the FSM’s 27 th annual dinner gathering in Kota Kinabalu last night.
The FSM chief assured that manufactuers, given a choice, preferred to give priority in employment to locals so that tedious and costly recruitment procedures can be avoided.
However, employers face the constant problem of retaining local workers as fast as they are recruited.
“Locals tend to view factory work as not only demeaning but dirty, difficult, dangerous and dusty,” said Wong. “Employers also find that when it comes to productivity and skills, foreign workers are very much better.”
Even so, the FSM agrees in principle with the state government that the number of foreign workers in Sabah be reduced and preference be given instead to local workers.
However, such support hinges on the state government ensuring that the local labour market is sufficient to meet industry’s needs not just in numbers but in productivity levels that can match global standards.
Meanwhile, pending the rethink on the local labour market, Wong urged the state government to reduce the RM 960 levy which was continuing to burden industry along with accommodation for workers and their dependents.
He proposed a standard levy of RM360 across all industries to help reduce the high cost of doing business in Sabah.
Wong also listed perennial problems like the extension of land leases as equally worrying along with the inconsistent labour supply problems. Extensions themselves are by no means an easy process and could take as long as ten years.
“There are no clear and transparent guidelines for approval nor was the premium rate and formula used,” complained Wong. “The government imposes significantly higher premium on industrial lands than agricultural land when the returns from the latter were lower.”
Litany of grouses growing
He noted that 999-year leases, awarded during the colonial and chartered company rule, were reduced to 99 years upon conversion of land use, but the basis is for this is unclear given freehold leases in Peninsular Malaysia.
Lok Kawi and Kolombong and other industrial areas in Kota Kinabalu, are flood-prone, the FSM chief said. This has meant losses when the floods hit these areas that have poor drainage systems forcing machinery to come to a halt and workers idle.
In addition, the electricity supply is inconsistent, causing financial losses and damage to machinery and equipment. Such losses were not compensated by Sabah Electricity Sdn Bhd which also refuses to give lower tariffs as one way of compensation.
The FSM’s litany of woes continue with logistics and transportation costs including for freight being singled out as excessive. Sabah shippers buying from Port Klang, for example, are forced to absorb the return journey as ship owners claim that their vessels return empty to Peninsular Malaysia.
The reason often given was that the federal government should bring freight costs down to a more competitive level for Sabah shippers through full liberalization of the shipping routes between Peninsular Malaysia.
That means doing away with the National Cabotage Policy (NCP) which reserves shipping to domestic waters for locally-owned ships.
Most of the domestically-owned vessels are based in Peninsular Malaysia and hence the complaint that the NCP doesn’t benefit Sabah or Sarawak.
Sabah’s population in 2005 was 3.2 million. Out of these, only 1.5 million are reckoned as locals while the rest are said to be foreigners including illegal immigrants and refugees who number 84, 000.
These illegals and refugees are those who have been in the country twenty to thirty years or more and placed in a different category from the newly-arrived illegal immigrants.
The new arrivals are subject to detention and deportation when detected.
“They face certain closure if no quick solutions are found,” said FSM president Wong Khen Thau. The foreign workers, the FSM says, are mostly making a beeline for the booming oil palm industry in neighbouring Kalimantan which is facing a labour shortage. No firm estimates are available on the number of jobs in Sabah, but they are estimated to be 50, 000, if not more.
“The situation should be viewed with concern and not allowed to escalate as they could otherwise cripple industries,” said Wong. “External factors negatively affecting industries are beyond the control of industrialists.”
He was elaborating on his remarks at the FSM’s 27 th annual dinner gathering in Kota Kinabalu last night.
The FSM chief assured that manufactuers, given a choice, preferred to give priority in employment to locals so that tedious and costly recruitment procedures can be avoided.
However, employers face the constant problem of retaining local workers as fast as they are recruited.“Locals tend to view factory work as not only demeaning but dirty, difficult, dangerous and dusty,” said Wong. “Employers also find that when it comes to productivity and skills, foreign workers are very much better.”
Even so, the FSM agrees in principle with the state government that the number of foreign workers in Sabah be reduced and preference be given instead to local workers.
However, such support hinges on the state government ensuring that the local labour market is sufficient to meet industry’s needs not just in numbers but in productivity levels that can match global standards.
Meanwhile, pending the rethink on the local labour market, Wong urged the state government to reduce the RM 960 levy which was continuing to burden industry along with accommodation for workers and their dependents. He proposed a standard levy of RM360 across all industries to help reduce the high cost of doing business in Sabah.
Wong also listed perennial problems like the extension of land leases as equally worrying along with the inconsistent labour supply problems. Extensions themselves are by no means an easy process and could take as long as ten years.
“There are no clear and transparent guidelines for approval nor was the premium rate and formula used,” complained Wong. “The government imposes significantly higher premium on industrial lands than agricultural land when the returns from the latter were lower.”
Litany of grouses growing
He noted that 999-year leases, awarded during the colonial and chartered company rule, were reduced to 99 years upon conversion of land use, but the basis is for this is unclear given freehold leases in Peninsular Malaysia.
Lok Kawi and Kolombong and other industrial areas in Kota Kinabalu, are flood-prone, the FSM chief said. This has meant losses when the floods hit these areas that have poor drainage systems forcing machinery to come to a halt and workers idle.In addition, the electricity supply is inconsistent, causing financial losses and damage to machinery and equipment. Such losses were not compensated by Sabah Electricity Sdn Bhd which also refuses to give lower tariffs as one way of compensation.
The FSM’s litany of woes continue with logistics and transportation costs including for freight being singled out as excessive. Sabah shippers buying from Port Klang, for example, are forced to absorb the return journey as ship owners claim that their vessels return empty to Peninsular Malaysia.
The reason often given was that the federal government should bring freight costs down to a more competitive level for Sabah shippers through full liberalization of the shipping routes between Peninsular Malaysia.
That means doing away with the National Cabotage Policy (NCP) which reserves shipping to domestic waters for locally-owned ships.
Most of the domestically-owned vessels are based in Peninsular Malaysia and hence the complaint that the NCP doesn’t benefit Sabah or Sarawak.
Sabah’s population in 2005 was 3.2 million. Out of these, only 1.5 million are reckoned as locals while the rest are said to be foreigners including illegal immigrants and refugees who number 84, 000.
These illegals and refugees are those who have been in the country twenty to thirty years or more and placed in a different category from the newly-arrived illegal immigrants.
The new arrivals are subject to detention and deportation when detected.
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