Chan Chee Khoon, a research fellow at Universiti Malaya’s Centre for Research in International & Comparative Education, said this was because the regimes on taxation and social entitlement vary among the ten countries, some of whom see large volumes of migrant labour within their borders.
“Unlike the medical tourists much welcomed in Asean member states, migrant workers are often perceived as an added imposition on overburdened public services, if not as freeloaders,” he said.
He added that a mandate for the enforcement of the Asean Declaration on the Protection and Promotion of the Rights of Migrant Workers, signed in Cebu in 2007, was progressing at a “glacial” pace.
“In fact, migrants in Malaysia pay about four times the user charges levied on Malaysians at government hospitals, under a mandatory hospitalisation and surgical insurance scheme that costs RM120 annually with maximum reimbursements of RM10,000,” he said, referring to the Foreign Worker Hospitalisation and Surgical Scheme.
He added that foreign workers in Malaysia also contribute significantly to public finances through annual levies, currently amounting to between RM640 and RM1,850, paid for by the workers, along with assorted administrative charges and consumption taxes.
“These levies and charges translate into de facto income taxes which are quite regressive,” he said, adding that migrants earning RM1,000 a month would be paying a “de facto income tax” rate of between 9% and 19%.
He said this would put them in the same tax bracket as that of a mid-career academic in Malaysia, without the citizen entitlements of the latter.
In contrast, a Malaysian citizen earning the same minimum wage income would need to pay only 0.6% of his salary as income tax, and is even likely to pay nothing after tax deductibles, he said.
In an opinion piece in Cambodia’s Khmer Times on Tuesday, Chan noted that about one in four employed persons was a migrant in Malaysia.
He also said foreigners accounted for about 40% of Singapore’s total workforce in 2012, while Thailand had 2.46 million low-skilled migrants from its three neighbouring countries of Laos, Myanmar and Cambodia in 2010.
Chan said the three labour-receiving Asean countries of Malaysia, Singapore and Thailand appeared to be more preoccupied with “medical tourists”.
“The Malaysian federal government, for instance, which controls the second largest listed healthcare provider in the world, IHH Healthcare, focuses more on an integrated regional health market than on a regionally harmonised social policy,” he said.
“An approach customised to the evolving taxation and social entitlement regimes of respective Asean member states may better accommodate, and build upon, the diversity of such regimes in the region.”
He said the multilateral agreement may adopt the generic principle that a host country’s “mandatory contributory regimes”, including income taxes, could be extended to migrant workers.
In return, the workers would be entitled to social benefits also available to local citizens.
“This, arguably, might have better political traction among the decision makers and general public of the host countries, than a narrowly rights-based discourse and approach to social benefits and entitlements for labour migrants,” he said.
Conclude regional agreement to protect foreign workers, says Malaysian Bar