Hoo Ke Ping told The Malaysian Reserve that most multinational corporations (MNCs) in Malaysia rely heavily on foreign labour, and this has become more expensive after tighter regulations were introduced.
“In light of how Malaysia has implemented stringent regulation to reduce intake of foreign workers into Malaysia, the cost for foreign labour has increased.
“This will eventually lead to MNCs packing their bags and move to countries where labour is cheaper, such as Laos, Vietnam and Cambodia,” Hoo was quoted as saying.
At the Dewan Rakyat yesterday, Mustapa was reported to have said there were many reasons for the 40 companies to leave Malaysia for other countries, but that it was negated by even more businesses moving their operations here.
“A drop in sales and demand, as well as the weak market environment are among the factors for companies to transfer their operations to other countries.
“Other push factors include the emergence of new innovations that have replaced existing technologies and products, as well as the rise in manufacturing cost,” Mustapa (BN-Jeli) said, adding that these foreign companies had mainly been labour-intensive firms.
Hoo said such labour-intensive firms were the most hard hit by the immigration department’s move to be more stringent with new foreign worker applications, as a move to curb the surplus of foreign workers.
The economist added that the recent flash floods in Penang, may also now affect manufacturers adversely forcing them to reconsider their continued operations here and even deter any future multi-national companies (MNCs) which are looking to invest in the country.
“Not only fresh and new MNCs, the current and older ones will be also looking for a way out of Penang as the floods have become a major issue for the state,” he was quoted as saying by TMR.
Another economist said it was not too late for the government to turn things around.
“The government should persuade MNCs to remain in Malaysia by providing sustainable incentives.
“We need to stop this trend somehow and to conduct a thorough study on existing MNCs operating here to gauge their views about the operations in Malaysia and to anticipate their next move.
“With new strategies and incentives, we could then keep them from leaving Malaysia,” Bajoyai Bardai told TMR.
He added that the government also needs to consider the fact that the United States government under President Donald Trump could impact MNCs coming to Malaysia or staying here.
“Unlike Japan, the US has yet to grant Malaysia the ‘tax sparing benefit’ which exempts income from the US corporate tax, even if the income has been exempted from tax here.
“And if there are good incentives on the home ground, the American MNCs will always be better off going after those incentives rather than be here in Malaysia,” Bardai was quoted as saying by TMR.
This was also cited by former World Bank economist Lim Teck Ghee who suggested the government look into this “very serious development”.
“The government needs to do a full and open inquiry as foreign investment flows have been a key factor accounting for Malaysia’s economic growth.
“Any large scale exodus of MNCs leaving the country will have negative ripple effects on employment, technology transfer and investors’ confidence,” Lim told TMR.