Region: Southeast Asia - Labour Migration Woes

2002

Malcolm Cook

Southeast Asia is clearly divided between major labour importing economies like Singapore, Malaysia, Thailand and Brunei, and major exporting ones like the Philippines, Indonesia, Laos, Cambodia, Myanmar and Vietnam. By the mid-1990s, around 25 per cent of Singapore’s and 10-15 per cent of Malaysia’s workforce were migrant labourers highly concentrated in construction, domestic service, and export manufacturing. At the same time, over 100 Filipinos a day leave for work overseas, with 40 per cent being first timers. The number of documented Indonesians working in Malaysia skyrocketed from under 30,000 in 1995 to over 300,000 in 1997.

For the decade up until the Asian financial crisis in 1997, hothouse growth rates in labour-importing economies - based upon investment in physical capital not productivity improvements - spurred their insatiable demand for cheaper and more plentiful migrant labour. However, since 2001 the governments of Singapore, Malaysia and Thailand have begun to tighten up restrictions on migrant labour, including the forced repatriation of unlicensed migrant labour and the closure of specific economic sectors to migrant labour. In April 2001, the Thai government announced a crackdown on previously welcome unlicensed foreign workers from Laos, Cambodia, and Myanmar and moved to expel up to 300,000 people. In mid 2002, Malaysia followed suit barring the construction, and export manufacturing sectors from employing migrant labour. At least 500,000 migrant workers left Malaysia ahead of new amendments to the Immigration Act, which took effect on 1 August and mandated that foreigners caught working without a permit faced fines, automatic jail terms, caning and deportation. The vast majority were Indonesians and Filipinos with substantial numbers also returning to Bangladesh and India.

The region’s much higher unemployment rates since the 1997 Asian financial crisis and the 2001 downturn in the global electronics interests were the short-term triggers for this new attitude among labour importing states. However, their governments’ plans to reorient their economies away from the East Asian Growth Model and its bias towards labour-intensive export manufacturing with few backward linkages strongly suggest this new attitude is more than temporary. Recent budgets in Singapore, Malaysia, and Thailand have focussed much effort on shifting their industrial structures towards capital and knowledge-intensive sunrise industries like health care, biotechnology, and research and development. All have also called for a stronger focus on local firms and domestic consumption. Neither of these shifts auger well for the semi-skilled migrant labourer.

Fears over the narrowing of these labour export markets and anger over the treatment of migrant labour especially in Malaysia have soured relations between governments of labour exporting and labour importing economies in the region. Politicians in the Philippines and Indonesia have strongly criticized the Malaysian repatriation efforts, while the Malaysian Ministry of Foreign Affairs moved to advise its citizens against travel to Indonesia due to the protests against Malaysia.

WATCHPOINT: Migrant labour flows used to be a strong regional 'glue' socially and politically. Changed attitudes in labour importing countries threaten to turn migrant labour into a permanent social and political irritant, especially as Vietnam and China have recently announced pushes to increase their labour exports.

 

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AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.

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