Malaysia’s present recruitment system, form of corruption, does not benefit the migrant worker! (Part 1)
Commentary And Analysis . . . Subject matter experts including the legal fraternity are in consensus that there can be no law in Malaysia against direct migrant worker employment by employers and workers.
Foreign workers can either come here and get a job or employers can visit worker‑surplus countries and hire workers directly.
Employers Associations, Workers Associations, and unions in both countries can be involved.
The philosophical foundation on the consensus, it can be conceded, was sound.
Under Article 6 of the Federal Constitution, there’s no slavery or forced labour, which implies that employers and workers should be free to contract.
The Contracts Act 1950 does not forbid direct hiring.
Direct Hiring
Direct hiring already exists legally for certain categories. MDEC, Petronas, and universities hire expatriates directly under the Expatriate Services Division (ESD) system without agents.
The Private Employment Agencies Act 1981 (Act 246) regulates agents; it does not mandate them. Direct hiring was not inherently illegal under law in Malaya.
The consensus was also correct that employers’ associations, workers’ associations, and unions can be involved.
Malaysia has ratified ILO Convention 97 on Migration for Employment, which encourages cooperation between employers’ and workers’ organisations in migration matters.
For example, the MTUC–KSBSI Memorandum of Understanding of 2019 already conducts pre‑departure briefings for Indonesian workers.
The Trade Unions Act 1959 and the Industrial Relations Act 1967 permit such involvement in recruitment and welfare matters.
The Germany–Indonesia Triple Win project – where German employers, Indonesian nursing unions, and GIZ cooperate without private agents – demonstrates that association‑led recruitment was both permissible and superior.
The consensus was not only legally permissible but represents best international practice.
Direct Migrant Worker Employment Wrong In Law
If the consensus had stopped at “There should be no law against direct employment”, it would have been a legitimate policy position. But it asserts that “there can be no law” – as a factual matter of existing legal reality.
That’s where it goes wrong.
First, there are laws that block direct hiring for general foreign workers.
Immigration Regulations 1963 Regulation 11 requires that employers apply for a Visa Dengan Rujukan (VDR) or Calling Visa through an approved source‑country system.
Since 2016, that system has been the Foreign Worker Centralised Management System (FWCMS), operated by the private vendor Bestinet.
No one cannot bypass FWCMS.
The 2018 Guidelines issued by the Ministry of Human Resources (KSM) for PLKS workers in manufacturing, construction, plantation, services, and agriculture requires that employers use licensed agents or FWCMS; direct applications are rejected.
Undocumented Workers
No plantation manager can visit Lombok and bring back workers directly tomorrow. The manager will be charged under section 55B of the Immigration Act 1959/63, which penalises the employment of undocumented workers.
A fine between RM10,000 and RM50,000 per illegal worker applies where proper procedures were not followed.
The consensus ignores existing subsidiary legislation and administrative policy backed by criminal sanctions.
Second, the consensus that “workers can come here and get a job” was illegal under current law.
Section 6(1)(c) of the Immigration Act 1959/63 provides that no person shall enter Malaysia without a pass or visa stating the purpose of entry.
Social Visit Pass
Social visit pass holders cannot seek or accept employment.
Section 39(b) makes working on a social visit pass an offence punishable by a fine which can reach RM10,000 or imprisonment for 12 months, or both.
The system requires a valid job offer before entry, obtained through the Calling Visa process. That’s precisely why agents exist for creating the paper trail before arrival. The literal reading of the consensus would counsel a worker to commit a criminal offence.
Third, the consensus that “employers can visit worker‑surplus countries and hire workers directly” was blocked by source‑country law.
Indonesia’s Law No. 18 of 2017 on the Protection of Indonesian Migrant Workers, for example, expressly prohibits direct hiring of Indonesian workers by foreign employers without the involvement of licensed Indonesian placement agencies (PPTKIS).
The Philippines’ POEA rules similarly ban direct hiring.
Even if Malaysia amends all its laws tomorrow for direct hiring, Jakarta will stop the worker at the airport.
A Malaysian employer cannot override the sovereign law of another state.
The consensus treats Indonesia and Bangladesh as passive recipients of Malaysian policy, ignoring their own statutory frameworks and enforcement mechanisms.
The consensus implies that there’s a system which must be removed, but it does not explain why the system was put in place. Agent intermediation was mandated after the 1990s for several reasons.
Fraud
First, documentation fraud: before FWCMS, employers submitted fake demand letters.
Workers arrived, found no jobs, and became undocumented. Agents were mandated as gatekeepers for verifation of genuine demand and quota.
Second, debt bondage prevention: source‑country agencies cap recruitment fees.
This has failed in practice, but it was the stated purpose of mandating intermediation. Direct hiring can result in illegal salary deductions; the Employment Act 1955, section 24, limits deductions, but enforcement was weak.
Third, recalibration and amnesty control: the Home Ministry uses agents for tracking numbers and controlling the migrant population. In 2023, there were approximately 1.7 million active PLKS holders. The Ministry claims that without agents, runaway workers cannot be traced.
Fourth, foreign policy and rent‑seeking: MoUs on labour recruitment are tied with diplomatic and trade arrangements.
For example, the Bangladesh labour quota was linked with purchases of palm oil and rice.
Agents are often politically connected in both countries; removing them disrupts rent‑seeking networks that underpin bilateral economic relations.
Recruiting Agents
The 2021 Malaysia–Bangladesh Memorandum of Understanding on worker recruitment, effective for five years, specifically contemplates the role of recruiting agencies.
The 2022 Malaysia–Indonesia Memorandum of Understanding requires the use of the One Channel System, which mandates Indonesian and Malaysian recruitment agencies.
These are not merely administrative policies; they are international agreements given domestic effect under Malaysian law. The consensus therefore does not merely challenge a ministry guideline; it would require Malaysia breaching treaty obligations. — NMH
In Part 2, we look at whether the Immigration Regulations 1963 must be amended for direct migrant worker recruitment.
Longtime Borneo watcher Joe Fernandez has been writing for many years on both sides of the Southeast Asia Sea. He should not be mistaken for a namesake formerly with the Daily Express in Kota Kinabalu. JF keeps a Blog under FernzTheGreat on the nature of human relationships.
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