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Figure 6: Benchmarking Foreign Workers in Malaysia versus Other Countries

Total International Migrants % from Total Population

Malaysia Hong Kong
2,469 173 2,804 753
8.3% 27.7% 0.4% 5.6% 38.9% 1.9% 42.9% 25.1%
Australia Japan
6,468 640 2,437 169

India Singapore
5,338 486 2,323 252 Hong Kong New Zealand

Thailand New Zealand Malaysia Australia India Thailand Japan Singapore
3,721 735 1,132 828

Source: Asia-Pacific Migration Report 2015

2.4 The contribution of foreign workers to economic growth and development

13. The presence of foreign workers bring economic benefits for the growth and sustained
development of Malaysia. Studies show that the presence of foreign workers is positive for
the creation of skilled and semi-skilled jobs for Malaysians. However, they do have negative
effects for low-skilled Malaysians who have to compete with these foreign workers. In
addition, the generally low wages associated with foreign workers is believed to exert
downward pressure on wage levels for this group of Malaysian workers and, more broadly,
for wage formation as a whole. As foreign workers are mostly employed in low-skilled and
labour intensive segments of industry, undue dependence on them are also contributory
factors in holding back industry from automating and investing in innovative production
equipment and processes to increase productivity and move into higher value outputs of
goods and services.

14. Reliance on foreign workers also allow Malaysians to invest more in their education
to acquire better qualifications to take up the higher skilled jobs consistent with the
government’s desired objective of reaching high income status for the country. Foreign
workers are also important for maintaining the competitiveness, particularly for the
manufacturing sector exports. Studies show that large firms, particularly those that export,
benefit more from the presence of foreign labour than small and medium-sized enterprises
(SMEs). However, in Malaysia SME activities represent a large proportion of the economy,
but as foreign workers participation in production and services are associated with low
productivity, SMEs seeking to increase productivity may have to reduce reliance on foreign
workers and invest in automation to remain competitive in the export supply chain.

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