Reliance on foreign workers, whose windfall is it?

After the shocker of a steep levy hike on foreign labour, Putrajaya thought that was not good enough. Then came the announcement on the additional 1.5 million workers from Bangladesh to add to the existing six million foreign workers in the country.

This will now easily outnumber the 6.5 million local work force, in both the public and private sector.

Never mind the fact that the reliance on foreign workers would entrench our "middle-income trap". Never mind the malaise of a low-skilled work force that will perpetually cause our industries to always remain anaemic in the low value-added economy and unable to graduate to a higher income one, by virtue of paying higher remuneration based on productivity.

Never mind the penchant for Putrajaya to merely provide lip-service to end this perennial problem, as they are towards the very end of their "overstay". Never mind about the much-bandied-around news of Bangladeshis voting in the next general election.

What this piece is wanting to highlight, with regards to this issue of foreign labour, is why do we need the involvement of agencies to recruit foreign workers? What I mean is the agencies on our side.

We could fully understand why the source country uses agents. They have to search, recruit, train and provide travel logistics for their workers. That cost is totally justified.

But the contention is why do we need agents over here, on our shore? Why? We could surely refer to the Human Resource Ministry and their staffs, should we need to employ foreign workers for our factories, etc.

Putrajaya has already made billions on levy for such services. So, why the need for extra agencies and with it the cost?

Let us see what is really happening . . .

An lndonesian maid costs between RM8,000 and RM10,000 (or more) to recruit. If the annual levy (which goes to the government) is RM500 and the cost of recruiting them is about RM3,000 at the point of the country of origin, who gets the remaining RM6,500?

Quite simply, it goes to the agencies that were awarded the Approved Permit (AP) to bring them in. Is it such a lucrative business? Well, it must be and I have just given you a scenario of recruiting a maid.

So, whose windwall is it after all? The government or entities called "cronies"? How much do they get? Well, just look at the case cited above.

So why do we need APs to hire maids after all? It is a marvel and a "scandal" for Putrajaya to prolong such "rent-seeking" activities and it is surely adding to the cost of doing business. Worse still now with the recent hike on levy.

For many years, cronies of the Home Ministry (and for that matter all ministries) have enriched themselves with the use of such APs. Little wonder as it is such a lucrative business for these middlemen, without much of a value-proposition from their end of the deal, mind you.

So again, this is a no-brainer kind of business and totally misplaced in a downturn. The sooner we stop it, the better. Besides energising our ministry to be more responsible and perhaps to embark on some multi-tasking efforts as to serve the business community, we indirectly have to weed out unnecessary cronies that are adding cost to doing business in Malaysia.

Crony practices and unfettered pandering to the rentier class (many types and class) have indeed destroyed this country's competitivenes.

We perpetuate it at our own peril. Just stop it! – February 12, 2016.

* This is the personal opinion of the writer, organisation or publication and does not necessarily represent the views of The Malaysian Insider.