PETALING JAYA: Malaysia’s upgrade to Tier 2 in the US State Department’s Trafficking in Persons (TIP) 2024 report reflects the concerted efforts of both the government and industries that must be continued and enhanced, says the Federation of Malaysian Manufacturers (FMM).
FMM president Tan Sri Soh Thian Lai said all stakeholders must work together to implement the National Action Plan on Forced Labour and other human rights initiatives so that Malaysia progresses to a Tier 1 ranking in the coming years.
“The government has taken the matter very seriously and has underscored its commitment to eliminate forced labour in the country by focusing on awareness, enforcement, labour migration as well as access to remedy and support services.
“Industries, with the assistance of the government and trade associations, have increased their efforts to eradicate any form of forced labour within their supply chain which would have otherwise impacted their market access.
“Such concerted efforts must continue for better market access and strengthening the overall business environment, contributing to sustainable economic growth and aiding companies in their compliance efforts,” he said in an interview yesterday.
Malaysia was placed in Tier 3 in 2021 and 2022.
Lauding the elevation in ranking, Soh said it will pave the way for our industries to have better access to international markets, especially for those that have faced increasingly stricter trade restrictions due to higher labour standards.
“Malaysian exporters’ reputation has been marred by the previous rankings,” he said.
“This elevation and continuous efforts to further improve would most certainly place Malaysia in a better position now to pursue more free trade agreements with major trading partners, including the United States where strict labour provisions are an integral part of the free trade agreement,” Soh said.
He added that the improvement could also aid companies in their environmental, social and governance (ESG) compliance by reducing risks associated with human trafficking, enhancing due diligence processes, aligning with international standards, boosting stakeholder confidence and providing operational benefits.
“This progress supports businesses in their commitment to ethical practices and sustainable development,” he said.
Soh noted that capacity building especially for SMEs must continue to ensure they can participate successfully in global supply chains.
The Malaysian Consortium of Mid-Tier Companies president Callum Chen said the improved ranking would make it less stringent when exporting firms in Malaysia go through international client audits.
“It’s certainly much better when our ranking is upgraded.
“Back then, when auditors came every month or every two months to check when our ranking was not good, it created red flags and auditors subsequently became much stricter.
“When there’s a red flag, every process was more stringent and it became tough.
“In a way, it’s good for compliance, but the stringent processes affected the mid-tier companies, larger SMEs and exporting firms, who employ many workers and make a big contribution to our national GDP,” he said in an interview yesterday.
Chen said Malaysian companies can do much more to help themselves and the government improve labour problems.
“It’s always easier to point fingers, but we hardly ask ourselves what can we do to help improve the situation.
“When employers take care of their people, the people will take care of the company,” he said, adding that employees should always be rewarded and treated well for their good work.
Chen, who runs a plastic manufacturing business and exports 95% of its products, said companies should also explore ways to automate and innovate their business processes, including utilising government grants and financial aids.
“This will help us cut reliance on foreign and unskilled labourers, retain, upskill and appreciate good workers and improve standards and output,” he said.
