Malaysia Economic Monitor December 2015 Immigrant Labour
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Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized 102131 MALAYSIA ECONOMIC MONITOR DECEMBER 2015 IMMIGRANT LABOUR Southeast Asia Country Management Unit Country Director: Ulrich Zachau Chief Economist: Sudhir Shetty Comments to: Mathew A. Verghis [email protected] Rafael Muñoz Moreno [email protected] Sasana Kijang No. 2, Jalan Dato’ Onn 50480 Kuala Lumpur, Malaysia +60 (3) 2263 4900 www.worldbank.org/my Acknowledgements This edition of the Malaysia Economic Monitor was prepared by Rafael Muñoz Moreno (task team leader), Ximena Del Carpio and Mauro Testaverde (lead authors, chapter on immigrant labour), Harry E. Moroz, Loo Carmen, Rebekah L. Smith, Çağlar Özden, Kamer Karakurum Ozdemir and Pui Shen Yoong, with contributions from Scott Abrahams, Jeeva Govindasamy, Manjula Luthria, Sharmala Narasingam, Chee Sung Lee, Mahuran Saro Sariki, Visvapurna Mahadevan, Jose de Luna Martinez and Sergio Campillo Diaz, under the overall guidance of Ulrich Zachau, Faris H. Hadad-Zervos, Sudhir Shetty, Mathew Verghis, Jehan Arulpragasam, Shabih Ali Mohib and Lars Sondegaard. This report benefited from fruitful discussions, comments, and information from various sections of the Economic Planning Unit in the Prime Minister’s Department, the Economics Department of Bank Negara Malaysia, the Department of Statistics Malaysia, the Ministry of Finance, the Ministry of International Trade and Industry, the Ministry of Home Affairs, the Ministry of Human Resources, Talent Corporation, the Performance Management and Delivery Unit (PEMANDU), Construction Industry Development Board (CIDB) and many other Government ministries and agencies. We also thank representatives from the Federation of Malaysian Manufacturers, the Electrical and Electronics Association of Malaysia and analysts at several financial and rating institutions for helpful discussions. We are indebted to the International Cooperation Section of Economic Planning Unit for their ongoing collaboration with the World Bank and in particular their extensive support in the launch of this report. Leonora Aquino Gonzalez, Paul Risley, Kanitha Kongrukgreatiyos, Ben Alex Manser and Buntarika Sangarun provided excellent assistance in external relations, web production and cover design. Noppakwan Inthapan, Marie Stella Ambrose and Chutima Lowattanakarn provided outstanding additional support. Photo credits: Nafise Motlaq. The findings, interpretations, and conclusions expressed in this report do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of the World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. The report is based on information current as of December 10, 2015. i ABBREVIATIONS PR1MA 1Malaysia Housing Program ADB Asian Development Bank 11MP 11th Malaysia Plan AEC ASEAN Economic Community ASEAN Association of Southeast Asian Nations BNM Bank Negara Malaysia BR Base Rate Bbl Barrel BLA Bilateral Agreements BoP Balance of Payments BR1M Bantuan Rakyat 1 Malaysia BRICS Brazil, Russia, India, China and South Africa JKKPA-PATI Cabinet Committee on Foreign Workers and Illegal Migrants CEBR Centre for Economics and Business Research CGE Computable General Equilibrium CIDB Construction Industry Development Board RELA Citizen Volunteer Force CPI Consumer Price Inflation CSC Critical Skills Monitoring Committee DSR Debt Service Ratio DECPG Development Economics Research Prospects Group DOI Department of Immigration DOSM Department of Statistics of Malaysia EAP East Asian and Pacific e-PPM e-application System LMD Labour Market Database E&E Electrical and Electronics ELX Electronic Labour Exchange EPF Employees Provident Fund EPS Employment Permit System EU European Union EB Evidence-Based ESD Expatriate Services Division MYXpats Expatriate Talent Service Centre FDICentre Foreign Direct Investment SPIKPA Foreign Workers Health Insurance Protection Scheme FBM KLCI FTSE Bursa Malaysia Kuala Lumpur Composite Index G&S Goods and Services GOF General Operation Force GLCs Government Linked Companies GNI Gross National Income GST Goods and Services Tax G2G/G-to-G Government-to-government GDP Gross Domestic Product GFCF Gross Fixed Capital Formation FOMEMA Health screenings of immigrants HR Human Resource HRDF Human Resources Development Fund ICT Information and Communications Technology I-Card Identification Card ILO International Labour Organization IMF International Monetary Fund MyIMMS Immigration Information and Monitoring System ILMIA Institute of Labour Market Information and Analysis JTK Jabatan Tenaga Kerja/ Department of Labour LFS Labo ur Force Survey LFPR Labour Force Participation Rate LCR Liquidity Coverage Ratio LRT Light Rail Transit MASCO Malaysia Standard of Occupational Categories MAEI Malaysian American Electronics Industry ii MEF Malaysian Employers Federation MMEA Malaysian Maritime Enforcement Agency MTEF Medium Term Expenditure Framework MTFF Medium Term Fiscal Framework MIDA Malaysian Investment Development Authority MIDF Malaysian Industrial DevelopmentDevelopment Finance MAC Migration Advisory Committee MOA Ministry of Agriculture MoF Ministry of Finance MOHA Ministry of Home Affairs MOHR Ministry of Human Resources MPIC Ministry of Plantation Industry and Commodity MOTAC Ministry of Tourism and Culture MOW Ministry of Works MPC Monetary policy committee MOU Memorandum of Understanding MRT Mass Rapid Transit MDeC Multimedia Development Corporation MSC Multimedia Super Corridor MYR Malaysia Ringgit NFPC Non-Financial Public Corporations NRD National Registration Department NTMs Non-Trade Measures OMARA Office of Migration Agents Registration Authority OECD Organization for Economic Cooperation and Development OSC One-Stop-Center OBB Outcomes Based Budgeting OC Outsourcing Companies OPR Overnight Policy Rate PPI Producer Price Index PLKS Visit Pass (Temporary Employment) PMR/SRP Penilaian Menengah Rendah/Sijil Rendah Pelajaran/Malaysian School Certificate PBS Points-Based Systems PEAs Private Employment Agencies PMIs Purchasing Managers’ Indices q/q Quarter-on-Quarter RSE Recognized Seasonal Employers scheme RP-T Residents Pass-Talent REE Retraining and Experience Enhancement SAAR Seasonally Adjusted and Annualized SARS Severe Acute Respiratory Syndrome SAWP Seasonal Agricultural Workers Program SMEs Small and Medium Enterprises SOCSO Social Security SPM/SPMV Sijil Pelajaran Malaysia/Sijil Pelajaran Malaysia Vokasional ST15 Super Tempatan 15 rice STPM Sijil Tinggi Persekolahan Malaysia/ Malaysian High School Certificate TalentCorp Talent Corporation Malaysia Berhad TE Temporary Employment TVET Technical and Vocational Education/Training UK United Kingdom UN United Nations UNDP United Nations Development Programme UNHCR United Nations High Commissioner for Refugees UPSR Ujian Pencapaian Sekolah Rendah/ Malaysian Primary School Certificate US United States VDR Visa with Reference VP Visit Pass WPS Wages Protection System WDI World Development Indicators WB World Bank y/y Year-on-year iii TABLE OF CONTENTS Executive Summary ............................................................................................................................................................................... 1 The Malaysian Economy in Pictures .................................................................................................................................................... 4 IMMIGRANT LABOUR in Pictures ........................................................................................................................................................... 5 1. Recent Economic Developments and Outlook ......................................................................................................................... 6 Growth moderates on domestic and external headwinds ...................................................................................................... 6 Renewed headwinds from the external sector .......................................................................................................................... 7 Strong E&E exports partially compensated for weak commodities ..................................................................................7 The current account surplus narrowed as the economy adjusted to lower commodity prices ..................................7 Domestic demand remains the key driver of growth despite headwinds .......................................................................... 10 Steady investment compensates for slower consumption .............................................................................................. 10 Labour markets remain steady but real wage growth slows ........................................................................................... 11 Inflation rose temporarily but moderated on account of lower oil prices ........................................................................... 12 Fiscal consolidation proceeds despite declining oil related revenues ................................................................................ 13 Growing uncertainties in domestic and external financial conditions ................................................................................