Malaysian industry is facing a severe shortage of manpower two months after implementing a decision to suspend the recruitment of new foreign workers.

Many factories are short of workers and their business development has been hampered. Worried employers have urged the government to revoke its decision to stop hiring foreign workers as the labour shortage has put their billions in investment at risk.

The Malaysian government is currently running a rehiring programme to legalize the status of migrant workers staying illegally and provide them job opportunities. The programme will run until June 31.

After the Nepal government imposed a ‘free visa, free ticket’ scheme and the Malaysian government decided to suspend recruitment of new foreign workers, the number of Nepali migrant workers going to Malaysia dropped sharply. Before that, nearly 200,000 Nepalis used to join the Malaysian workforce annually.  

According to media reports, nearly 55,000 foreign migrant workers have been granted permission to work legally in Malaysia under the rehiring programme. There are very few Nepalis among them. A majority of Nepalis are engaged in the production and service sectors.

Mohammed Izhaar Mohammed Sebirm, an apparel factory owner in Petaling Jaya, a satellite town near Kuala Lumpur, said he needed 125 foreign workers but had been able to hire only 20, according to media reports. A survey conducted by the Federation of Malaysian Manufacturers showed that up to 84 percent of the factories are facing manpower shortages and potential loss of revenue.

According to the survey, 49 percent of the member businesses had been unable to fulfil current orders, 25 percent turned down new ones, 21 percent had to close their production lines, 24 percent were hit with penalties for missing delivery deadlines and 60 percent were operating under capacity. The federation has urged the government review the policy.

Malaysian industrialists have requested the government to correct its decision as the shortage could affect the country’s productivity and slow down economic growth. According to reports, a shortage of workers has put more than $5 billion in investments at stake.

Roland Mueller, the president of the Free Industrial Zone Penang Companies’ Association which groups 70 domestic companies and multinationals from the US and Europe operating in semiconductors and electronics, said some members may cut investments in Malaysia and shift to other countries in the region, according to local media reports.

A study conducted last year showed that there were 483,000 Nepalis working in Malaysia legally. “The contribution of Nepali workers to Malaysia’s economy is significant,” said a Nepali entrepreneur. “If the government withdraws its decision, there are high chances that Nepali workers will be accorded top priority.”

As Malaysia hires foreign workers for a three-year period, a termination of their contracts will create a shortage of workers in the near future.