The Malaysian Insight

UNLIKE big corporations, smaller companies are finding it difficult to abide by the new requirements on workers’ living conditions, especially under the current economic conditions, said industry groups.

The third wave of Covid-19 infections in Malaysia, which began in September, has highlighted again the poor living conditions of foreign workers.

Most cases have been in the construction and manufacturing sectors, which employ large numbers of foreigners.

Compliance with the Workers’ Minimum Standards of Housing and Amenities Act (Act 446) is now in the spotlight, with Top Glove Corp Bhd under investigation by the Labour Department for possible violations after its facilities became the source of the country’s largest Covid-19 cluster to date.

The world’s largest glove manufacturer said it will complete the process of improving quarters by year-end.

The requirements of Act 446 should have been nothing new to employers, as the bill was brought to Parliament last year, well before the pandemic struck.

It was passed by both houses of Parliament in July 2019 and gazetted in September last year. However, it was only enforced on September 1 this year.

Checks with various industry groups found that other sectors that are reliant on foreign workers have not made the necessary preparations and are now struggling to comply due to suppressed cash flow as business takes a hit from the pandemic.

Besides construction and manufacturing, the other sectors include farming and furniture manufacturing.

Malaysian Furniture Council (MFC) president Khoo Yeow Chong said bigger companies can resolve such issues immediately but smaller businesses need more time to adapt.

“SMEs are now cutting expenses wherever they can. The government should give them an adjustment period of three to five years.

“I do not oppose the new rules but time is needed to adapt,” Khoo said.

Employers are now facing cash-flow and billing issues, while some SMEs will also have problems in applying for loans from banks, he said.

There are also companies housing their workers in the factory compound for years and will now need time to find new accommodation.

“For example, some oil palm processing factories in rural areas, where proper accommodation is not easily available, they have been housing their workers within the factory area. Such cases will need time to be resolved.”

Master Builders’ Association Malaysia (MBAM) president Foo Chek Lee said employers are willing to comply with the new rules but need time to do so.

“Those who have difficulty complying are smaller businesses, as they do not have complete accommodation set up for their workers.

“Maybe they have leased a unit that houses 15 to 20 people, but now the rules say only six are allowed, so companies have to find new accommodations for their workers and this needs time.

“Especially for places like Kuala Lumpur, finding suitable accommodation for workers is not an easy task.”

Under the law, the required space per worker is now at 3.6 sq m and employers need to revise accommodation plans and renovate to meet the new standards.

“We are not opposing the new rules but under the challenging economic circumstances currently, there should be a buffer period first, or it will bring a lot of financial pressure on employers.”

He also hopes that enforcement will allow first warnings instead of immediately fining employers with the maximum RM50,000.

Too costly to comply with law

Malaysian Vegetable Farmers’ Association consultant Tan So Tiok said strict adherence to the act’s requirements would add at least 20% to costs for employers in this sector, especially those with large numbers of farm workers.

“The cost for renting units will add substantially to monthly expenditures and this will affect the whole supply chain. Consumers may even be turned off by the hike in prices.

“Frankly speaking, I don’t think there is any accommodation in the farming industry that meet the new standards.

“That is why we haven’t heard of any farmer applying for accommodation certification because that would mean a huge increase in costs.”

Under Act 446, employers are to apply for accommodation certification with the Human Resources Ministry.

Once certified, employers must meet the ministry’s criteria on living space, sanitisation facilities and provide basic personal supplies, including a bed, pillow, cupboard, among others.

Workers must also be segregated by sex and accommodation must have enough natural light, ventilation and electricity supply.

Khoo said before the government goes on an enforcement spree, it must ensure that rules are streamlined across all states to avoid confusion.

This is because some states allow workers to stay within the factory compound itself, while others don’t. Some local authorities allow the conversion of shop lots into workers’ living quarters, while others don’t.

“It’s all very messy and confusing.”

For the furniture industry, Khoo said MFC has already instructed members to comply with the act to avoid penalties.

Meanwhile, Bernama reported Human Resources Minister M. Saravanan as saying on December 3 that some 91% or 1.4 million foreign workers in the country are provided with accommodation that does not comply with provisions in Act 446.

He said he found the statistics “very worrying”, especially with the current pandemic.

“The government received application for certificate of accommodation for only 143,587 or 8.89% of the 1.6 million foreign workers in the country as of October 31.

“This situation clearly shows that employers and providers of centralised accommodation for 1.4 million foreign workers in Malaysia still fail to apply for the certificate from the Department of Manpower Peninsular Malaysia.”  – December 4, 2020.