Executives on the production line is a wake-up call, says ex-minister
- on Sep 06, 2022
PETALING JAYA: The acute labour shortage that has forced factories to rope in executives and senior managers to man production lines should serve as a “wake-up call” to the country, a former minister said.
Johari Abdul Ghani, a former second finance minister, was commenting on FMT’s coverage about the labour crisis forcing manufacturers in the electrical and electronics (E&E) sector to turn down orders valued at millions of ringgit.
The crunch could potentially spur an exodus of investment and talent from Malaysia, ranked as the world’s sixth largest exporter of semiconductors and integrated circuits as of 2021.
“Without the requisite labour and skilled talent, there is a risk of losing our competitiveness,” warned Johari, a seasoned entrepreneur himself.
“The talent crunch will not just deter new E&E investments from Malaysia but could also pressure existing investors to flee to other Asean countries.”
In this bleak scenario, Malaysia will be vulnerable to other Asean nations that covet its E&E crown, he said.
“Given that Malaysia has built up a strong pool of E&E talents through massive investments over the years, we will be a prime target for the Asean countries’ expansion,” he said. “If other nations lure our talent away, our brain drain will deepen and Malaysia’s future investment appeal will dim.”
Breaking the bottleneck
While the government has taken steps to enhance the system, bottlenecks still occur due to lack of manpower to deal with the pent-up demand for foreign workers as the economy reopens.
Thousands of employers have been queuing at the human resources ministry for interviews for their foreign worker quota applications but were reportedly “turned away”, causing chaos. Even those who had been interviewed and promised a decision within 14 days have been waiting for months for a reply.
What can Malaysia do to resolve this crisis?
“The best solution would have been for the government to expedite foreign worker approvals through a transparent, predictable and an automated system,” Johari said.
Centralisation and automation are key to speeding up the foreign worker application and approval process.
“Ideally, a dedicated ministry or one-stop centre should be designated to oversee all matters pertaining to foreign and domestic investors, including the labour and talent mechanisms,” he said.
Honouring pledge of business friendliness
A key facet of investor confidence and Malaysia’s competitiveness is the ease of doing business here. As such, the government should demonstrate its integrity and defend its business-friendly image by bringing in the requisite foreign workers to accommodate investors.
“Many companies have, over the decades, made the decision to invest in Malaysia because they were guaranteed ease of doing business. This includes ensuring the availability of both low and high-skilled workers. The country must fulfil this obligation,” stressed Johari.
“It would be wise for the government to engage with companies to discuss pre-requisites for supplying foreign workers to help Malaysia scale further up the value chain.
“For example, the government could negotiate with existing investors to bring in additional higher value-added processes that could utilise and retain the higher skilled talents available in the country.”
Why not hire Malaysians to fill in the vacancies?
There have been efforts to fill these vacancies with locals. However, an industry source says this does not work in practice as Malaysians reject these kinds of low-skilled jobs. This is why companies need the foreign workers urgently.
Hiring locals for such jobs is also counter-productive to the country’s vision of becoming a high income and high skilled economy.
“The government’s priority should be on developing Malaysian talents for high-skilled high value jobs rather than encouraging them to take up low-skilled openings. Otherwise, the economy would regress,” said Johari.
A refreshed investment strategy
In connection with this, Johari said it was vital that we think strategically in positioning foreign direct investment (FDI) as an effective tool for economic sustainability.
“We should be transparent about the capabilities and competencies of local talent to convey a realistic picture of FDI prospects and conditions.”
“This would enable investors to bring in businesses and activities that match with the skills and talents available in the country.”
In turn, this could potentially create job opportunities for local talents that match their qualifications, support talent retention and alleviate wage arbitrage.
Also, defending the country’s brand and competitiveness as an attractive hub for investment and talent should be a top priority for the government.
“We have a track record of accommodating all the FDI requirements. Therefore, we need to seriously address this labour crisis. Otherwise, it will be very difficult for Malaysia to attract FDI in future,” Johari added.