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‘I feel scared going out’: How migrant workers become outlaws in Malaysia’s electronics industry

After closing down part of the production and sacking its migrant employees, a Malaysian factory supplying Panasonic and Toshiba demanded excessive sums of money to give workers their confiscated passports back, workers claim. Factory management denies accusations.
After closing down part of the production and sacking its migrant employees, a Malaysian factory supplying Panasonic and Toshiba demanded excessive sums of money to give workers their confiscated passports back, workers claim. Factory management denies accusations.
Research: Sara Kaas-Petersen
Photos: Amin Kamrani
Redaktør: Jesper Hyhne | Ansv. chefredaktør: Jesper Nymark
A Danwatch investigation

‘I feel scared going out’: How migrant workers become outlaws in Malaysia’s electronics industry

Alina grabs a radish with her left hand and laboriously slices the root into circular pieces with a knife. She makes small piles of round chunks, then cuts them into sticks and offload them from the chopping board onto one of the many big white piles of radish sticks that surround her in the empty restaurant.

About the investigation

Danwatch has been to Malaysia to meet some of the hundreds of thousands of migrant workers that play a vital part in the country’s electronics industry.

In Malaysia, we interviewed 12 workers from three different factories and have since conducted a number of interviews with workers via video calls.

Danwatch interviewed two former employees of the electronics factory, Mctronic, who are now undocumented migrant workers in Malaysia. Via video calls, we have interviewed three more former employees who have returned home to Nepal.

Danwatch have copies of the workers' ID cards and documents that show they have all worked at the factory and did not get to finish their contracts. For the workers' safety, their names have all been anonymized.

The investigation was supported by the EU-funded project Make ICT Fair and published in collaboration with Setem.

She is not very fast at chopping. But then again, the 37-year old Nepalese is not used to cook for a living. Alina used to assemble telephone parts and fix wires. She only just started working in the restaurant a week ago. Since then, Alina has not dared to go outside.

“It has been a week now. I haven’t gone anywhere. I feel scared going out,” she says.

“They say the police will arrest me.”

Alina’s Malaysian visa and ID-card says that she is working at a Malaysian electronics factory. But now that she is working at the restaurant, her visa has become invalid, and Alina has become an undocumented migrant worker in Malaysia.

Like the estimated 2-4 million other undocumented migrant workers in Malaysia, she is now vulnerable to gross exploitation and abuse.

If Alina is caught by the Malaysian immigration authorities, she may be detained for months and whipped - a penalty that is occasionally used before deportation, according to Malaysian workers’ rights organizations and migrant lawyers.

Stopped paying wages

Alina initially signed a three-year contract with the electronics factory, Mctronic, which supplies Panasonic with telephone parts and produce computer servers for Toshiba.

Her contract guaranteed her work for three years, but after just one year and four months in the job, the management told her and a group of around 40 Nepalese co-workers that due to some operational changes there was no more work for them at the moment.

It has been a week now. I haven’t gone anywhere. I feel scared going out

“They simply stopped paying our wages,” Alina says.

“They said we should go and stay in our hostel and then they would call us back after a week or a month.”

But the factory management never called. And since the migrants according to Malaysian law are tied to their original employer, Alina and her co-workers were stuck in their hostel with no income. They began using their savings and soon had to start borrowing money in order to buy food and essentials.

The kitchen which 'Alina' has been working in for the past week. Danwatch meets her here a few hours before the restaurant opens.

After several months without pay, many of the Nepalese workers wanted to return to Nepal. But the factory had kept their’ passports since their initial visa application. Now the workers claim that the company is demanding vast amounts of money to hand the passports back to them.

Could not afford to go home

According to Alina the factory demanded around 870 euro to return her passport and provide her with a flight ticket home. That is, according to Danwatch’ research, five times the price of the cheapest flights to Nepal’s capital Kathmandu and the equivalent of nearly four months of basic salaries at the factory.

Recruitment fees

In a 2014 Verité study of over 400 electronics workers, 92 percent of migrant workers had paid recruitment fees to become employed in Malaysia.

Recently, Malaysia adopted legislation preventing recruitment fees from exceeding one month’s wages, but unoficially, most recruitment fees do.

Most often, the money goes to both agents and sub-agents in the migrant's home country, as well as a recruiter in Malaysia and potentially a number of other actors. The effect is that the worker is plunged into debt which may causes the migrant to basically work in debt bondage.

Source: ILO, OECD and The Asian Development Bank Institute 2019, Verité 2014

Danwatch has been in contact with other former Mctronic workers who were dismissed at the same time and are now back in Nepal. One worker told Danwatch that he paid Mctronic approximately 400 euros to get his passport back and travel home. According to several former workers, the price decreased for workers who initially refused to pay. They claim  that some of the first workers to go back paid as much as 970 euro in order to obtain their documents and fly home, while others ended up staying for months at the hostel, before they were finally able to travel home for about 180 euro.

Some workers say that Mctronic offered them work at other Malaysian factories before they went back. One worker says he agreed to take a job at a glass factory but after 42 days at the new place he ended up paying Mctronic to get back to Nepal anyway.

He told Danwatch he had felt unsafe at the glass factory after experiencing a co-worker getting his arm severely cut on the job without proper medical care, and after the workers had been told to hide from the police when they came to inspect work permits. Wages were also less at the glass factory than at their original workplace, as food and transportation were not included in the pay, he says.

Another worker said that he and a group of co-workers were first re-employed at two other electronic factories, but that wages were lower, and they were not paid for their daily two hours of overtime work. Workers were moreover required to buy food at the workplace which in combination with the lack of overtime pay made it almost impossible for them to save any money. Therefore, he ended up paying Mctronics 400 euro to go back to Nepal as well.

Other workers, like Alina, decided to run away from the hostel in order to look for a new job - now as an undocumented migrant in Malaysia.

'Alina' initially traveled to Malaysia to make money in order to pay off her deceased husband's debts and to cover the cost of her two children's education.

Like for most migrant workers in the country, going to Malaysia had been a big investment for Alina and her family. She had migrated to pay off the debts from her deceased husband’s farm and in the hope of financing the education of her two children, but much of the first year’s income was used to pay off the approximately 950 euro she claims to have paid in recruitment fees. The factory deducted the money from her salary along with a smaller amount for a government levy she says.

“It was so difficult, but I had no other options,” she says.

20 people in one room

Serving tables at a restaurant a couple of miles from where Alina chops radishes, another Nepalese and former Mctronic employee tells a similar story. Like Alina, 38-year old Binsa could not afford to return to Nepal when the factory stopped paying her wages, so she also went looking for other work as an undocumented migrant.

Batsa and Ram both had major deductions taken from their wages. The deductions had largely prevented them from sending back remittances to their families and made it impossible for them to produce savings.

In the restaurant Binsa works 12 hours a day, seven days a week for about 8,6 euro a day. When Danwatch meets her, she is not allowed a break, so we talk while she attends our table in between serving fried rice and coffee to other customers.

“I have tried looking for other jobs, but conditions are often much worse,” she says while balancing three trays of lunch.

They promised us it would be clean, but they put us in a dirty place, 10-20 workers stuck like cows

According to most estimates, there are more undocumented than documented migrant workers in Malaysia and they should be counted in millions according to the UN’s International Organization for Migration.

Most undocumented workers enter the country legally but become undocumented if they for example flee their original employer because of abusive working conditions or if their employment agent do not renew their work permit on time or lose their passport. Once considered ‘illegal’, workers are vulnerable to even graver exploitation - as Danwatch can tell in our story on undocumented workers who are subjected to forced labour.

As is often the case according to labour rights groups, Alina and Binsa claim that a recruitment agent in Nepal had promised them higher wages and better working and living conditions at the electronics factory, before they agreed to pay the recruitment fees and travel to Malaysia.

Former Mctronic workers have taken photos inside the hostel they were accommodated in. According to Alina, they were mostly around 10-20 people living in the same room.

Binsa says she paid 1100 euro in recruitment fees. Besides the lower wages, she was especially disappointed about the hostel she was accommodated at in Malaysia.

“They promised us it would be clean, but they put us in a dirty place, 10-20 workers stuck like cows”, she says.

Against the law

According to Sumitha Shaanthinni, a Malaysian lawyer specialised in migrant cases and director of the organisation Our Journey, it is almost impossible for migrant workers in Malaysia to legally switch jobs. This is one of the main reasons behind the large number of undocumented workers in the country, she says.

Confiscation of passports

The Malaysian Passport Act of 1966 states that a person cannot hold another’s passport.

Employers generally need the migrant workers' passports for paperwork when they first arrive to Malaysia. Though it is against the law, the employers often hold on to the passports after that.

Source: Passport Act 1966, Verité 2014

“If they are unhappy with one particular employer, they often have no other option than to leave and become undocumented workers. Because they know they won't be able to change their employer”, she explains from her small office on the 5th floor in central Kuala Lumpur.

Though recruitment fees are often paid by the workers themselves, employers may also have paid some money to a recruitment agent as well as the official levy for employing foreign workers, workers rights’ groups point out.

“It is common that they will not let go of workers easily if they can get them to cover such costs too”, says Adrian Pereira, who is the executive director of the North South Initiative, an organization that provides various types of support for migrant workers in Malaysia and their origin countries.

While Malaysian law clearly states that it is not legal for an employer to confiscate passports, the law also states that employers should cover repatriation expenses  – in this case the flight ticket back to Nepal – in case the contract is terminated before time, Sumitha Shaanthinni explains.

Employers: workers are selfish

According to a comprehensive 2014 study by the American watchdog organization Verité with a sample of more than 400 electronics workers, around one third of foreign workers in Malaysia were forced to work against their will.

Probably, they are just being selfish

Workers’ rights groups point out that workers are especially at risk of gross exploitation because they have no option of legally switching to another job.

However, at the labour agency association PIKAP Malaysia, which represents 150 Malaysian agencies, Honorary Secretary Sharfadeen Abd. Hamid do not think that abuse of labour rights is the main reason why workers leave their workplace to work without proper documents.

“Probably, they are just being selfish”, Hamid tells Danwatch in PIKAP’s office building, a five-minute walk from Kuala Lumpur’s landmark twin skyscrapers Petronas Towers.

According to the Honorary Secretary, workers likely run away because they are not able to do their job properly, or because they see an opportunity of earning more money as undocumented workers. Hamid is however not able to present any concrete documentation to support these claims.

“When you have a problem, you should find a way to solve the problem rather than blaming someone else, like your employer, and then run away”, Hamid says, adding that workers become illegal when they run away and are thus “volunteering themselves to get abused”.

According to the UN Guiding Principles on Business and Human Rights, the nation state should protect the human rights while companies should respect them - even when the state fails to do so.

All companies should investigate whether human rights are affected negatively throughout their supply chain and the company has a responsibilty act if it happens.

Source: UN Guiding Principles on Human Rights 2019

“Eventually you are also giving the government a headache. The government now has to look for the illegal workers, catch them and put them in the detention centres. And then to liaise with the embassies to deport them. It’s so much work", the Honorary Secretary says.

Denies accusations

It has not been possible for Danwatch to get a comment from the Malaysian electronics factory Mctronic. In an email to Danwatch,  Toshiba spokesperson, Peter Carson, writes that the company has been in contact with the factory after Danwatch’s enquiry.

“However, we were unable to identify the issues you mentioned from the response we received from Mctronic Industries”, he writes and continues to emphasise that Toshiba acknowledges “that human rights violations are critical issues in Asian countries including Malaysia” and that the company requires its suppliers to adhere to the law and Toshiba’s procurement policy.

At Panasonic, media spokesperson Mio Yamanaka tells Danwatch that they have been in contact with Mctronic. She also states that the factory told a different story but refrains from promising that Panasonic will investigate the matter further.

“Mctronic explained that their 39 workers recently quit their job and returned to their home country. When Mctronic proposed to their employees that they change their workplace due to operational change at the factory, their workers refused to accept this proposal and decided to resign. The wages of the workers were fully paid by Mctronic”, Yamanaka writes.

Asked if the two companies are planning to conduct any kind of independent investigation or if they trust their suppliers’ version of the story, Peter Carson writes that Toshiba “are going to conduct our own on-site audit and are now making the necessary arrangements.”

From Panasonic, media spokesperson Mio Yamanaka says that: “Panasonic believes that we should consider doing a more in-depth survey that does not rely solely on the supplier’s information”.

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