This article first appeared in The Edge Malaysia Weekly on March 28, 2022 - April 3, 2022

MALAYSIA’s ratification of the International Labour Organization’s (ILO) Protocol of 2014 to the Forced Labour Convention 1930 (No 29) is a good start in the road to combating forced labour in the country, say labour industry experts.

Malaysia became the 58th country in the world and the second Asean member state after Vietnam to ratify the protocol when Human Resources Minister Datuk Seri M Saravanan deposited the instrument of ratification last week at the ILO headquarters in Geneva, Switzerland, in the presence of ILO director-general Guy Ryder.

Adopted during the 2014 International Labour Conference, the protocol reinforces the international legal framework for combating forced labour. The fundamental obligation of Convention No 29 — one of the 190 ILO conventions — is to supress all forms of forced labour, which means that states must not only criminalise and prosecute forced labour, but also take effective measures to prevent forced labour and provide victims with protection and access to remedies including compensation.

Forced labour is defined by the ILO as work that is performed involuntarily and under coercion. It includes men, women and children in situations of debt bondage, suffering slavery-like conditions or who have been trafficked. Malaysia’s issues with forced labour, or at the least the ones that have been prominently highlighted by the media, are mostly surrounding the problem of debt bondage.

Prof Niaz Asadullah of the University of Malaya’s Faculty of Business and Economics calls the ratification a “significant first step” for Malaysia, noting that it should provide the country a comparative advantage from a regional standpoint.

“Within Asean, we fiercely compete with our neighbours for foreign capital and workers. Plentiful supply of foreign labour is not only critical for attracting foreign direct investment in labour intensive, export-oriented sectors, it’s also key for our plantation sector. Yet neither Singapore nor Thailand, two major destinations of foreign workers in Southeast Asia as well as Malaysia’s competitors, have ratified [the protocol].

“We have made history by becoming the second country in Asean after Vietnam to have done so. This move has the potential to not only attract ESG (environmental, social and governance)-sensitive investment projects, [but] over time, this may also cause diversions and relocations of multinational corporations from other parts of Asean to Malaysia,” he says.

Adrian Pereira, an executive director with social justice NGO North South Initiative (NSI), agrees that the ratification will be a game changer for labour law reforms in Malaysia.

“The ratification, coupled with the amendments to the Employment Act to include the [ILO’s] definition of forced labour would mean that the local laws, regulations and enforcements will have vision and clarity for eradicating forced labour in Malaysia — something which the country has deliberately [abandoned] for the past 20 years,” he tells The Edge.

However, some quarters have expressed concern that until the national legislation aligns with the commitments stated in the protocol and until all contradictions between the two are resolved, ratifying the latter would have little impact on the fight against forced labour.

Niaz, who is also the Malaysia and Southeast Asia Lead for the Global Labor Organization, shares this concern.

“We have a long record of implementation failure — add to this the existing governance gaps in terms of inadequate monitoring and enforcement and a lack of onsite inspections. And this is not the first time Malaysia has ratified international conventions. In the absence of supporting national level legislations, many in reality remain ignored.

“I’d also add that most existing free trade agreements (FTAs), including the Trans-Pacific Partnership (TPP), demand clear commitment for protecting workers’ rights. Many TPP countries have ratified labour-related conventions. Yet their track records of implementation and enforceability vary widely. Malaysia may follow this pattern.

“For these two reasons, it is too early to say whether the ratification will end forced labour and produce visible improvements in labour standards in Malaysia,” he says.

On what the ratification of the protocol would mean for local businesses, and whether they could face more scrutiny, which could translate into a higher cost of doing business given potential compensation payouts for victims of forced labour, Pereira says a carrot and stick approach would best apply for businesses.

“The carrot would be in the form of more stability in the global supply chain and reduced risks for Malaysia, [which then] encourage investments. While that happens, the stick is also needed as many companies still have gross abuses happening and the only way they will learn is via the strong hand of the law.

“Looks like it is time for them to do the right thing if they do not want to be fined and have their operating costs [increase],” he says.

Niaz says that if the ratification of the protocol is fully implemented through national legislation, this could result in the cost of business going up.

“It will mean an end to the hidden subsidy that our business elites and foreign investors have enjoyed for decades in the form of plentiful supply of cheap foreign labour and/or exploitative work conditions.

“But the ratification (with full implementation) may also have a countervailing effect: better employment conditions and pay will improve worker morale and boost worker productivity; it’d also address our ‘image problem’ as an exporter, at least temporarily, and reduce the current uncertainty over access to high-income country markets where consumers are increasingly demanding ‘fair’ trade products,” he says.

At the end of August last year, the number of registered low-skilled foreign workers in the country stood at 1.1 million persons, which was significantly lower compared to the close to two million persons employed in 2019. The decline was mainly due to a freeze in the employment of foreign workers in several economic sectors by the government.

As at August 2021, the manufacturing sector employed the highest number of foreign workers with a share of 35.4%, followed by the construction (21.1%) and services (14.4%) sectors. The Federation of Malaysian Manufacturers (FMM) commended the government for the ratification of the ILO Forced Labour Convention, stating that it will not only improve Malaysia’s standing in the global arena as a preferred trading and investment nation but also significantly lift the status of Malaysian manufacturers and exporters.

“Ensuring that business operations are conducted with the utmost level of responsibility in addressing any form of forced labour is a top priority for the industry as there has been significant intensification of global action against forced labour and human trafficking recently and Malaysian exporters have not been spared.

“Any unhealthy business practices would have a damaging impact and jeopardise the significant role and competitiveness of Malaysian manufacturers in the global supply chain. Any allegation or act of forced labour must be viewed very seriously and addressed expeditiously, failing which it will significantly threaten and damage a company’s reputation, its investor relations and community standing, and concurrently tarnish the entire sector and country’s standing in the global arena,” FMM president Tan Sri Soh Thian Lai said in a statement.

Echoing FMM’s sentiment is Malaysian Employers Federation (MEF). Its president Datuk Dr Syed Hussain Syed Husman called the ratification a big win for Malaysia, and a win for Malaysian employers and businesses.

“MEF stands by fair and professional practices in labour management. The greatest asset any organisation has is its people, the employees. Treat them well and your productivity will go up,” he says.

On whether the ratification would help the case of some Malaysian companies that are facing sanctions by the US Customs and Border Protection for alleged forced labour practices, or help Malaysia improve its Tier 3 ranking in the US State Department’s Trafficking in Persons (TIP) Report — which is the lowest level in human trafficking ranking, Niaz says this is unlikely.

“On paper, it has the potential to reduce the international scrutiny (or global pressure) we currently face and that seems to be the primary justification for the ratification. It at least shows our intent and a shift in mindset in the policy circle towards labour abuse. In theory, the ratification can also produce benefits through an expressive function of law by promoting decent work conditions as social norms and positively impacting employer behaviour.

“But, given our past records, it alone is not a guarantee for sanctions to be lifted. International rights bodies will continue to closely and independently monitor actual business practices. Unless facts on the ground show improvement, I don’t see an immediate end to existing sanctions.

“As for the TIP ranking, I don’t expect an immediate improvement given our porous border and many loopholes in the immigration system,” he says.

NSI’s Pereira concurs. “I don’t think this ratification will ease their concerns as we saw recently, different governments struggling to formulate meaningful memoranda of understanding with Malaysia. This shows that Malaysia still has a weak capacity of operationalising international standards and reaching consensus with its partners.

“In reality, we know that there are many problems caused by the ‘competing interest’ between the human resources and home affairs ministries, and foreign governments are cognisant of this. The fact we have two National Action Plans — one for forced labour and one for trafficking — is very confusing. So while ratification looks good symbolically, it is a long road ahead before we see measurable impacts,” he says.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.