Cost of hiring Indonesian domestic workers in Malaysia remains a concern


The Malaysian and Indonesian governments signed a Memorandum of Understanding (MOU) on the recruitment of Indonesian domestic helpers which promises them an improved and more comprehensive protection, but also appears to increase the costs of hiring one.

The MOU was signed on 1 April by Malaysia’s Human Resources Minister M Saravanan and Indonesia’s Manpower Minister Ida Fauziyah, and was witnessed by Malaysian Prime Minister Ismail Sabri Yaakob and Indonesian President Joko Widodo.

The new MOU marks a change for the domestic helper labour market in Malaysia, where a freeze on foreign workers intake was enforced since June 2020.

Only the construction, plantation and agriculture sectors were allowed to hire foreign workers.

While the costs might be a concern for potential employers, recruitment agencies that CNA spoke to voiced their support for the new agreement, stating that it would allow them to restart business.

One key stipulation in the MOU is the use of a single channel or “One Channel System” for the recruitment and placement of Indonesian domestic helpers.

Mr. KT Tan, who runs an employment agency, said that before the hiring freeze and border closures brought on by the Covid-19 pandemic in Malaysia, the government had instituted a “Sistem Maid Online” (SMO) application system.

SMO, which was introduced in 2018, allowed employers to directly hire domestic helpers, who could enter Malaysia on a tourist visa and then have their status as domestic helpers regularised by the employer.

“This process also allowed employers to negotiate directly with Indonesian recruiters, but not everyone could do it because you had to have contacts with the Indonesian recruiters on the other side.

“Moreover, you also had to do the legwork of registration and the medical check-ups for the helper yourself,” he explained.

However, Mr. Tan said, the Indonesian government had insisted on the single hiring channel to ensure better monitoring and protection for its nationals, hence the introduction of the “One Channel System”.

The new MOU also stipulates a number of protections, from a minimum basic wage of RM1,500 (US$355) per month for the domestic helper to eight days of annual leave per year for the duration of a two-year contract.

In addition, a “one helper per household” rule will now apply to prevent overwork, as there have been instances of employers shuttling their domestic employees between two or even more households to maximise their labour usage.

Mr. Saravanan, the Malaysian minister, also announced that the hiring cost structure for Indonesian helpers would be reviewed every three months.

He was quoted by state news agency Bernama as saying that this quarterly review was to ensure that the cost structure was in line with current needs. The fees would also take into account changes in the costs of transportation and health tests.

One aspect of the new memorandum which has raised concerns for potential employers looking to hire a new maid is costs.

In the previous MOU which ran from 2013 until 2016, recruitment fees were supposed to be at a maximum of RM7,800. But some agents charged up to RM14,000, said Mr. Tan, the agency operator.

The new MOU will cap hiring fees at RM15,000.

Mr. Tan said the fee cap covers total costs on both the Indonesian and Malaysian side, and it is a good mechanism as recruitment fees were getting out of hand.

“With the fees capped at RM15,000, it really depends on how much Indonesian recruiters charge on their side, because we have costs such as the helpers’ medical check-ups, their foreign worker levies and other processing fees to settle too,” he said.

“Anything more than RM10,000 from the Indonesian recruiters, I think it will be a little tight for us ,” he added.

The Malaysian agencies also have a lingering concern regarding payment.

Association of Employment Agencies Malaysia (PAPA) president Foo Yong Hooi said based on a flowchart of the process provided to the agencies, they have to pay first before they would receive biodata of any workers from their Indonesian counterparts.

Likewise, Mr. Tan said there is no clarity yet on how Malaysian agencies would be protected if their Indonesian counterparts were unable to deliver workers, or if the domestic helpers absconded.

“How are we to be protected from financial loss this way?” he said.

The recruitment agencies in Malaysia have been receiving enquiries even before the MOU signing, as many domestic helpers have returned home during the two years Malaysia moved in and out of lockdowns.

Some of their contracts have also expired and the employers could not find a replacement due to the hiring freeze.

With the new MOU in place, the number of enquiries received by recruitment agencies has increased slightly with anticipation that employers could soon hire domestic workers. (Source: CNA)