By TMR

Inappropriate policies and ineffective institutions have resulted in the South-East Asia region not being able to tap the full potential of the presence of a large migrant worker community.

Together, Malaysia, Singapore and Thailand house the bulk of the total migrant workers in Asean.

With the right policy choices, sending countries can reap the economic benefits of outmigration, while protecting their citizens who choose to migrate for work, said World Bank chief economist for the East Asia and Pacific region Sudhir Shetty.

“In receiving countries, foreign workers can fill up labour shortages and promote sustained economic growth, if migration policies are aligned with their economic needs.

“Inappropriate policies and ineffective institutions mean that the region is missing opportunities to gain fully from migration,” he said in a statement accompanying the release of the World Bank’s report entitled “Migrating to Opportunity”.

Asean is short for Association of South-East Asian Nations, the association banding together 10 nations: Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Cambodia, Laos, Myanmar and Vietnam.

In the recently released report, it is suggested that easing restrictions on labour migration can boost workers’ welfare and deepen regional economic integration.

Intra-regional migration in Asean increased significantly between 1995 and 2015, turning Malaysia, Singapore and Thailand into regional migration hubs, with 6.5 million migrants — 96% of the total number of migrant workers in Asean, according to the report.

Some US$62 billion (RM254.82 billion) in remittances were sent to Asean countries in 2015. Remittances account for 10% of gross domestic product (GDP) in the Philippines, 7% in Vietnam, 5% in Myanmar and 3% in Cambodia.

The report noted that low-skilled, and often undocumented Asean migrants move in search of economic opportunity, mainly in the construction, plantation and domestic services sectors. Higher-salary jobs are available, yet, workers are not always able to take advantage of these opportunities.

It noted that the Asean Economic Community has taken steps to facilitate mobility, but these regulations only cover certain skilled professions — doctors, dentists, nurses, engineers, architects, accountants and tourism professionals — or just 5% of jobs in the region.

Overall, the report said migration procedures across Asean remain restrictive.

“Barriers such as costly and lengthy recruitment processes, restrictive quotas on the number of foreign workers allowed in a country, and rigid employment policies constrain workers’ employment options and impact their welfare.

“These restrictive policies are partly influenced by the perception that an influx of migrants would have negative impacts on receiving economies,” according to the statement.

However, it noted that there was evidence to the contrary. In Malaysia, simulations find that a 10% net increase in low-skilled immigrant workers increases real GDP by 1.1%. In Thailand, recent analysis found that without migrants in the labour force, GDP would fall by 0.75%.

“No matter where workers wish to migrate in Asean, they would face mobility costs several times the annual average wage,” said World Bank economist for the social protection and jobs global practice Mauro Testaverde, the lead author of the report.

“Improvements in the migration process can ease these costs on prospective migrants, and help countries respond better to their labour market needs.”

The impact of labour mobility on the region’s economies can be significant, as migration could provide individuals from lower-income countries with the opportunity to increase their incomes.

The report estimated that reducing barriers to mobility would improve workers’ welfare — by 14% if only targeting high-skilled workers, and by 29% if including all workers.

The report also suggested that a range of policies can be implemented to enhance workers’ mobility, while more oversight of recruitment agencies is needed across the region.

It noted that the highly-developed support system for migrant labour in the Philippines can serve as a model for other countries, while Indonesia could improve coordination among relevant agencies and streamline procedures. Vietnam can benefit from a national migration strategy to guide reforms.

It also noted that outmigration can be costly, particularly in lower-income countries such as Cambodia, Laos and Myanmar, where simplifying formal processes could help reduce costs.

On the other side of the coin, it noted that receiving countries can also introduce measures to maximise the benefits from labour mobility.

For Malaysia, the report said that it could adjust its migration policies to the country’s economic needs, including by revising its current levy system and by deepening coordination with sending countries.

Thailand, it said, may benefit from formalising undocumented migrants and making entry procedures less costly.

It noted that Singapore has developed a highly sophisticated and well-functioning migration system; attention should continue to be paid to the welfare of migrant workers. — TMR