NEARLY a fifth of Malaysia's over 11 million workforce is foreign and it is believed that an equal number of illegal foreigners are in the local employment market.
These foreign workers perform unskilled and semi-skilled jobs.
Although Malaysia needs these workers to keep up with the industrialisation pace, heavy dependence on this group could derail the country's plan to be a high income and highly productive nation.
About 40 per cent of more than 1.8 million legal foreign workers are in the manufacturing sector, followed by construction (20 per cent), plantation (14 per cent), housemaids (12 per cent), services (10 per cent) and the rest in the agriculture sector.
Slightly more than half of them are Indonesians, while the rest are Bangladeshis, Nepalese, Burmese, Indians and Vietnamese.
The government has always been pragmatic when it comes to dealing with foreign workers, sometimes to the extent of reversing its newly-introduced policies to accommodate employers' needs.
Its liberal and pragmatic foreign worker policy as well as lack of enforcement could also be contributing to the higher number of foreign worker population.
For four decades since Malaysia's industrialisation drive, there has not been a comprehensive guideline or roadmap on foreign labour.
Policies have so far been ad hoc, while enforcement and deportation of illegal immigrants seasonal.
With the government's renewed goal to be an advanced industrialised nation through the launch of the New Economic Model, foreign worker issues now have to be addressed comprehensively and strategically.
As Malaysia can no longer afford to accommodate labour-intensive industries, the focus now is to scale down the unskilled foreign worker population. It will, however, have to be done on a gradual basis so as not to hurt employers and company operations.
That is why under the 10th Malaysia Plan (10MP, 2011-2015), the government has proposed a multi-tiered levy system.
The new system aims to regulate the entry of foreign workers by incentivising businesses to eventually put in place non-labour-dependent, high-productivity processes.
The system, that works on a market-based mechanism, makes it costly for employers to maintain unskilled foreign workers on their payroll.
The levy will be proportionate to the ratio of foreign workers to the company's total workforce, while the rates increase over time and vary according to the workers' skills level. This time around, levies will be borne by employers and not foreign employees.
Thus, it is understandable if employers are not in favour of additional pressure on labour cost.
Although the government still allows the construction and plantation sectors that face serious labour shortages to recruit foreign workers, players in the construction industry are beginning to adopt the industrialised building system that reduces construction time and workforce.
Employers who feel that it is too expensive to hire local workers, or reluctant to move up the technology ladder - despite government grants and financing schemes to assist them in automation and mechanisation - should relocate to low labour cost countries.
The move to weed out labour-intensive companies and grow capital-intensive ones is badly needed in a medium-income economy like Malaysia.
Casualties that arise as a result of the transformation to a high income, highly productive economy is inevitable and in fact, a "healthy evolution".
If the rakyat have to swallow the bitter pills of subsidy cutbacks, which is aimed at cutting budget deficit and channelling the funds for the nation's growth, why can't the profit-maximising businesses contribute to the country as well?
By innovating and going high-tech, companies contribute to the country's overall productivity, while paying the foreign worker levies would help the nation's growth by increasing the government's coffers.
After all, during good times, not all companies share their profit proportionately between the management executives and the lower ranking staff. Yet, these low-level employees are those who risk being laid off first during bad times.
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