Ahmad Tajuddin Ali, Chairman, UEM Group and Construction Industry Development Board; and Joint-Chairman, Malaysian Industry-Government Group for High Technology: Interview

Ahmad Tajuddin Ali, Chairman, UEM Group and Construction Industry Development Board; and Joint-Chairman, Malaysian Industry-Government Group for High Technology

Interview: Ahmad Tajuddin Ali

To what extent is Malaysia overly dependent on low-skilled foreign labour?

AHMAD TAJUDDIN ALI: Due in part to the enormous strides our economy has made, market demand for labour has grown even more, and the construction sector has been instrumental in the progress we’ve made. One only has to look at the improvements in logistics infrastructure to understand where we are. We have built ports, airports, highways and mass rapid transit systems, but this growth has resulted in a discrepancy in the labour force. Labour demand across four key sectors – plantations, manufacturing, services and construction – cannot be met domestically, so we’ve had to rely on imported foreign labour. This poses a new set of challenges for us as long-term economic planners. For the construction sector it’s a double-edged sword: without foreign workers there isn’t a large enough domestic labour pool willing to work in the sector, but by bringing in these workers we are solving a current problem by creating a future one. Utilising foreign workers eliminates the chance to train locals, and without access to proper training, the industry cannot offer salaries that are sufficient to attract Malaysians to the sector.

How would you like to see this paradigm change?

ALI: I recently visited the Construction Industry Council in Hong Kong, and they told me that their entire industry has approximately 1000 foreign workers. In Malaysia we have millions. In Hong Kong, if foreign construction workers are brought in, it’s required by law that they be paid an amount commensurate with that of their domestic counterparts. Here in Malaysia though, employers can get away with paying a rate that is not attractive enough to entice locals to the industry. The net result is that we are not training our own population to be more skilled, and therefore local workers do not increase their potential value, earn higher salaries or contribute to making the sector more productive. If employers are not pressured, they will just use current technology and low-skilled foreign workers to carry out work, rather than investing in equipment and technology to raise levels of productivity. We need to transition to a model that is more similar to countries such as Australia that utilise far fewer workers in favour of mechanisation.

What is the solution to this fundamental issue?

ALI: It’s a chicken and egg issue and will take some time to address. As part of an overarching strategic effort, in September 2015 the prime minister launched our Construction Industry Transformation Programme (CITP). This is a government initiative driven by the Ministry of Works that aims to overcome some of the problems we’re facing. The programme has four key components: quality, safety and professionalism; environmental sustainability; productivity; and internationalisation. The aim of the latter is that we see the development of firms with an ability to win not only major local contracts, but also tenders overseas. In this respect we have already made great strides – Doha airport and Abu Dhabi’s Formula One race track are examples of iconic international projects that have been built by Malaysian companies.

Along with the CITP, we are looking at expanding educational programmes and institutions related to the sector. We have the Malaysian Construction Academy that trains people in specific skills and trades, but low salaries here push many graduates overseas. Trainees from high-skilled sectors are snapped up even before they graduate, and this was true especially in the oil and gas sector before prices fell. We’ve also introduced our companies to new technologies, and events such as International Construction Week have brought technologies and solutions to the attention of our firms here. It is with these measures that we hope to encourage more Malaysians to get involved and reduce the need for foreign workers.

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The Report: Malaysia 2016

Economy chapter from The Report: Malaysia 2016

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