27th September 2021

Migration has always been a powerful engine of prosperity for individuals, businesses, and the nations between which they move, filling critical shortages in labour markets in destination countries and channelling crucial financial resources to their countries of origin through remittance flows. Migration patterns are also susceptible to constant change, owing to differences in national economic performance, technological advancements, and demographic transitions, particularly among the elderly.

Because of the importance of migration to both origin and destination countries, as well as its shifting forms, businesses and governments must constantly evaluate and adapt to new possibilities such as the rise of digital payments in Malaysia, as well as the potential hazards. Low-wage migrants in Asia and the Pacific face a variety of exploitations, which may intensify over time as migration patterns shift in new directions and to new locales.

Most recently, the COVID-19 pandemic disrupted migration flows, international supply chains, and the global economy, placing 81 million people out of work in Asia and the Pacific by 2020 and exacerbating the migrant worker situation dramatically.

Understanding future lower-skilled migration patterns and the factors that will likely impact this flow will be critical for businesses and governments to ensure that migrant workers are included in inclusive and just COVID-19 recovery efforts and that steps are taken to enhance the advantages and reduce the risks of this critical but often dangerous migration journey.

Migrant workers in Malaysia

Despite a long history of international migration dating back to the late nineteenth and early twentieth centuries, Malaysia regards immigration as a transitory expedient and a short-term solution to the country's labour needs. While migrant workers are permitted to enter Malaysia for a limited period, there are several regulations in place to control their access to the labour market. Migrant workers, for example, are only permitted to work in a limited number of industries, including manufacturing, agriculture, plantation, construction, mining, and services. Migrant workers may lose their "legal status" if they do not comply with the requirements. Migrant workers account for up to 30% of the workforce (including undocumented migrant workers).

Many migrant workers in Malaysia come from developing and disadvantaged nations, seeking better living possibilities abroad. It should be noted that, in addition to contributing financially to their respective home countries through inward remittances, migrant workers' presence in Malaysia is also an important factor in maintaining or improving productivity (i.e., willingness and ability to work long hours; lower turnover than local workers – partly due to the prohibition on changing their pre-determined schedules).

Manufacturing, service, construction, and plantation industries are among the sectors of the economy that have remained export-oriented (for manufacturing) and labour-intensive. These industries rely largely on low-wage workers, but they may also use low- and semi-skilled migrant laborers to meet company labour needs. Migrant laborers are frequently employed in tasks that are dirty, dangerous, and difficult (3D), and are frequently avoided by local workers. Local workers' hesitancy or reluctance to take on these types of jobs leaves certain openings empty, allowing migrant workers to fill the gaps. While working in Malaysia benefits migrant workers in many ways (e.g., job opportunities and remittances), some drawbacks must be considered. A growing number of research and public publications are exposing various forms of migrant labour exploitation.

Migrant workers in Malaysia encounter a variety of issues and obstacles

Despite some aggressive official measures to curb the COVID-19 spread, the government's approach to issues involving migrant laborers and other non-citizens has resulted in substantial negative repercussions. This section discusses the concerns and obstacles that migrant workers confront.

1. On-going immigration raids in still fear amongst undocumented migrant workers

Since the 1st of May, 2020, immigration raid activities have been underway, leading migrant workers, particularly those without a valid passport and working permit, to flee. As a result, undocumented migrant workers, particularly in high-risk industries like construction, manufacturing, and plantation work, are not only unable to work for fear of being arrested, but they are also unable or unwilling to be COVID-19-tested if they have a symptom or a significant travel history. The government's immigration sweeps, according to civil society, are not only instilling terror among undocumented migrant workers to come forward and get COVID-19 tested, but they are also brutal, given that many of these undocumented workers are observing the holy month of Ramadhan. Furthermore, the arrest of hundreds of vulnerable women and children, and their placement in a situation where social distance is impossible to practice during the arrest and detention time, was seen as counter-productive conduct in the pursuit of a zero positive COVID-19 case.

2. Immigration detention centers are becoming COVID-19 hotspots

Over 2000 undocumented migrant laborers had been captured in a string of immigration raids as of May 25, 2020, and were being held in various immigration detention facilities. As a result, the number of detainees in immigration detention centers has increased, notably in the Klang Valley. The lack of social separation, combined with the poor health system and sanitary standards found in many detention centers, may raise the chance of a COVID-19 outbreak. They will congregate in banks to withdraw money and remittance centers to transfer money back to their hometown, especially on paydays. If they have a digital channel, the risk will be reduced.

3. Reduced or loss of income, unemployment, and irregularity

Employers were ordered to limit their human resources to 50% or less of the overall workforce before the implementation of the Recovery Movement Control Order (RMCO) on June 10, 2020. This was to follow the SOP set by the government for essential and additional industries since the first MCO (March 18, 2020) until the Conditional Movement Control Order (CMCO) ended on June 9, 2020. Many workers, especially migrants working as daily-wage and productivity-based workers, were not allowed to work at this time. Some employees were permitted to work for a set number of days per month, while others were not permitted to work at all. This resulted in a significant drop in their monthly income, or no income for at least three months, particularly for individuals who were not required to work during the MCO.

The shortened hours of business operations have drastically lowered the monthly revenue of migrant employees who were paid on an hourly basis but were still allowed to work. The reduced days and hours of work had substantial financial ramifications, not just for maintaining their monthly expenditures in Malaysia, but also for the overall amount of earnings sent back to their home countries, given their already low monthly incomes.

4. Lack of food supplies and at risk of hunger

Food is scarce, putting vulnerable migrant laborers at risk of starvation. Three instances in which migrant workers face a scarcity of food supplies can be seen. Long hours of road travel and decreased hours of business operations in many grocery stores and markets had limited access to food supplies for many migrant workers living outside of the city center or in distant areas. While some migrant workers may be able to obtain food supplies close to their workplaces and lodgings, there has been an increasing report of shopkeepers and local businesses imposing exorbitant charges on foreign employees.

Second, many migrant workers, particularly those without legal travel and employment permits, are afraid to leave their hiding spots to get food. While civil society and trade unions provided humanitarian support to illegal migrant workers (i.e., delivering basic food and other daily needs), it was insufficient.

5. Information and communication barriers

Another challenge that migrant workers in Malaysia encounter is the lack of information and communication. Many migrant workers are unable to read and understand local and English languages, however, some may be able to converse in these languages regularly. However, most COVID-19-related informational materials, if not all, are generated in either Bahasa Malaysia (local) or English, or both. These include preventative tips and standard operating procedures (SOPs), which are mostly created and communicated through the media, including social media.

Why do banks need to reach the unbanked?

Did you know that there are more than 1.7 billion individuals in the world who do not have access to financial services? This means they don't have access to financial services, such as a bank account or an e-wallet. Africa, South Asia, Southeast Asia, and China are home to most of the world's population. Many of them reside in locations without official financial institutions and are far away from banks. Digital technology holds the most promise in terms of making financial services more accessible, inexpensive, and long-term. For people without a bank account, mobile phones have made sending and receiving money, making payments, and even obtaining credit easier and less expensive. What's fascinating is how technology has expanded exponentially among revenue groups all over the world, even reaching the bottom of the pyramid.

With payment systems increasingly transitioning to the digital sphere, reaching out to the unbanked is more important than ever. People used to be paid in cash for their employment a decade ago. However, as the world moves toward digitization, people who were formerly paid in cash must find new ways to be compensated for their work. According to a survey, 9 percent of the global population created a bank account to begin receiving their employment payments.

Because most people are looking for digital payment solutions and moving away from a cash-based economy, traditional financial institutions must seize the opportunity and make it simple for the unbanked and underbanked to use their services. A service that would be beneficial for the unbanked is a digital payment system that starts to lessen the necessity of a cash-based economy. For example, EVOLET creates financial accessibility for the unbanked by aiming to help improve the digital payment system in Malaysia for organizations and their payroll processes, while also creating financial accessibility to the unbanked.

Removing barriers to expand access to banking

Most unbanked people believe that opening a traditional bank account is out of reach due to the lengthy procedures and increased scrutiny they must undergo. Banks, on the other hand, are required by law to conduct due diligence on customers and conduct regular surveillance to prevent involvement in crimes such as money laundering and terror funding before embarking on them. Furthermore, technologically advanced clientele prefers to perform transactions digitally from the comfort of their homes rather than physically visiting bank branches. Banks without technology are hesitant to get online due to cybersecurity concerns.

Banks should build digital channels to provide greater convenience to customers while also lowering the cost of banking services. Digital networks can assist providers in overcoming infrastructure and regional barriers. The most difficult task for banks is onboarding customers who are unable to visit or do not have access to a bank branch. Remote customer onboarding will be a game-changer for banks, allowing them to access a bigger audience. However, there is a need to secure the onboarding process. Video KYC is one of several developments that are assisting in the secure onboarding of new customers.

EVOLET is a digital wallet app for migrant workers.

Learn more at