The popular theory is that Malaysians need migrant workers as much as they need us. Not everyone agrees, reveals the conclusion of our three-part series on the move to send home illegal immigrants.

More than two million foreign migrants in Malaysia take up jobs which locals generally consider to be too dirty, dangerous or demeaning.

Although it is known that the majority of these 'guest workers' are in the country illegally, their presence has been tolerated quietly by authorities all this while.

This attitude now seems set to change, sending shock waves throughout economic sectors which have come to depend on foreign labour to fill manpower shortages.

By far the hardest hit is the construction industry which employs some half million foreign workers, 70 percent of whom live in the country illegally.

According to the Master Builders Association Malaysia (MBAM) an organisation which represents the construction and services sector the effects are already being felt at some job sites that have been left with only 20 percent of their workforce.

MBAM vice-president Patrick Wong claims that a number of large development projects have come to a standstill.

"This will impact on housing developers most seriously. Many will virtually go bankrupt due to the delay in the delivery of houses. We have been using Indonesian workers for the past 10 to 15 years. The industry is totally unprepared for this change," he says.

Ripple effects anticipated

MBAM president Lau Mun Cheong forecasts that the shock will cost the construction sector 0.7 to 0.8 percentage points from an already modest projected growth rate of less than three percent for the year.

This is likely to have strong ripple effects on other sectors, particularly since the construction sector growth has been a key driving force behind national growth over the past few years.

Lau adds that other proposals to overcome manpower shortages are still less than fully viable.

The construction sector has been particularly unhappy over the government's ruling to prevent employers from bringing in new Indonesian and Bangladeshi workers.

"The government has proposed another eight or nine countries from which to source workers but most of the workers from the new countries are inexperienced," he said.

"Some, like the Thai workers, are experienced but we do not speak the same languages. Costs of hiring these workers are also higher."

Minimum wage, maximum fuss

Echoing these sentiments is MR Chandran, chief executive of the Malaysian Palm Oil Association whose member companies employ about 100,000 foreign workers.

"The government has introduced new countries (from which to source workers) but none of them are suitable. They all have conditions imposed upon employment such as minimum wages," says Chandran.

For example, the Indian government demands a minimum wage of RM600 per month per worker while the Nepali government sets a RM18.30 per day standard for their nationals. In contrast, neither the Indonesian nor Bangladeshi government sets such restrictions.

Chandran, however, says the agricultural sector is unlikely to be directly affected by the amended law against illegal entry of immigrants because most workers in plantations have been brought in via proper channels.

Furthermore, while limitations on employment of Bangladesh nationals apply, the plantation sector has been granted a waiver and may continue hiring Indonesian workers.

"Unlike the other industries, our workers live in the estates (where) they are provided with housing. We can easily monitor them. They are not a social liability or a security risk. We also provide them with all the amenities hospitals, clinics and schools," he explains.

Chandran says a prevalent problem is that of workers leaving the estates, attracted by the bright city lights and the belief that they may earn higher wages at construction sites.

As such, the agricultural industry now asks itself whether the shortage in the construction sector will serve as a stronger magnet to estate workers, or whether the strict new immigration laws may instead introduce more stability to discourage "runaways".

Tedious recruitment process

The Federation of Malaysian Manufacturers (FMM) says that, while it has always advised its members to recruit their workers through proper channels, one reason that illegal workers are still employed by some manufacturers is the "tedious and costly" process in bringing in workers legally.

"The common [misconception] is that manufacturers employ foreign workers because the labour is cheap. Recruitment of foreign workers through the proper channels is not cheap," the FMM says in a statement responding to malaysiakini questions.

"Employers have to pay the same amount of wages to foreign workers (as local workers) in addition to placing bonds with the government, repatriation costs, providing accommodation and transport (if required) and charges for work permits."

Logical step

Aegile Fernandez, the migrant desk coordinator at labour rights organisation Tenaganita, suggests a more logical step would be for the government to document the illegal workers and deploy them to work with approval in sectors experiencing labour shortages.

According to her, most of the 15,000 undocumented Bangladeshi workers who left recently for fear of being arrested had arrived in the country before 1996. Very few have actually entered in the last few years.

"These workers had adapted to working in Malaysia and had learnt the language. Why don't we document them and use them to fill the demand for labour?" she asks.

New workers, says Fernandez, would mean starting afresh a situation which could affect productivity levels.

Productivity not affected

Malaysian Institute of Economic Research executive director Dr Mohamed Ariff, however, offers a dissenting viewpoint.

Ariff is confident that adjustment pains will be temporary because foreign workers are only required to perform low skilled and repetitive tasks.

"Generally, the kind of job that they do requires little oral communication. These are mechanistic jobs in which workers do routine work. They can pick up the skill requirements very fast and they pick up the language fairly quickly as well," he says.

"If they are allowed to stay longer, it will be harder to send them home later. They will get rooted here and this will cause social complications which will be difficult to sort out later."

Tech transfers truncated

Ariff goes a step further in saying that eventually, Malaysia should be self-reliant in labour needs and keep the employment of foreign workers, whether legal or undocumented, to low levels of necessity.

According to him, the government's strategy of allowing foreign workers to fill shortages of workers in labour-intensive industries has been wrong since it has enabled inefficient firms to put off investments into advanced labour-saving technologies.

"Technological transfers have so far been truncated by the influx of foreign workers. We will have to jumpstart this all over again to move from low value-added technologies to high value-added technologies."

Furthermore, some sectors such as agriculture have long been uncompetitive not just because of higher wage costs compared with other countries, but also because land is more expensive.

While these arguments have merit, it remains to be seen if the move to clear out the illegal immigrant population will survive its unpopularity with certain economic sectors that expect a decline in activity.