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The member for Rembau, Khairy Jamaluddin, brought into the fuel subsidy forum the specter of our “unhealthy dependency” on foreign labour, with some agreement from Tony Pua and Nik Nazmi. Apparently, foreign labour depresses wages. Yeah, sure – no foreign labour: higher wages. Which also means, higher factors of production. And then higher prices.

And consider immigrant-saturated economies: Singapore have much higher wages for both low-skilled labour (100,000 Johoreans cross the border daily not just for the pure joy of passing through the Causeway) and professional jobs than Malaysia. And it is far easier to immigrate to Singapore than Malaysia (in fact, as a Malayan, it is far easier for me to migrate to Singapore compared to Sabah or Sarawak).

UAE, hardly a city-state, also have significantly higher wages across the board as well, as does to the lesser extent other Gulf states. Also, moving away from a migrant workforce (beyond making the problem of illegal immigration far worse) will also force economic sectors to move away from labour-intensive industries. Our traditional edge in rubber and palm oil, which is doing us pretty good these days, would end. Hopes of surpassing Singapore, presently the world’s busiest port, in container traffic in the future would be dashed: PSA would have the advantage of foreign labour and lax immigration law, Westport, Northport, PTP, etc. will stand little chance.

If anything, slashing taxes (like our sky-high, by ASEAN standards, corporate taxes) will do a lot to raise wages in Malaysia. Removal of heavy government intervention, in terms of fixing prices, for example, will help wages go up to. A revamp of the education system (easier done if the government just takes a back seat, via vouchers, ala Sweden) will help productivity and thus wages. In other words, depressed wages in Malaysia without the commensurate purchasing power is largely due to the overwhelming size of the government in the economy.

Quite clearly, there are other factors, as pointed out by Tony Pua. There is no foreign competition in law (Pua’s example), yet fresh graduates entering the Bar have significantly lower wages than their counterparts in Singapore (where it is far easier for foreigners to move in and practice). Sure, foreign labour does keep wages down. But they are, for the most part, a good thing: they keep the cost of living down and make our firm more competitive (and no, Khairy, if a Malaysian company does better internationally, we benefit more than Dhaka, Bangladesh).

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