iProperty.com sought the opinion of some experts on the matter.
What is the resulting effect of the freeze on developers, and, in turn on property prices?
Following the suspension, the Master Builders Association Malaysia (MBAM) compiled a chart showing the actual supply and demand for foreign workers in the local construction industry. It clearly shows the number of foreign workers that is needed in the next 10 years.
It is estimated that the industry needs at least 1.995 million on-site foreign workers by 2020, up a whopping 823,000 or 70.2% from last year’s figure of 1.172 million. Local workers can only meet a small percentage of these needs. Hence, if the ban is effected over a longer period, it will result in a delay in construction works and ultimately, higher wages. This, in turn, translates to higher property prices in the long run.
I feel that the banning of foreign workers should not be done across the board. Certain industries such as plantation and construction should be given a longer time to stage out foreign workers. At the same time, the relevant stakeholders must step up to the plate in order to train and convince locals to take on jobs in these industries.
Executive Director of KGV International Property Consultants Sdn Bhd
Malaysia has been dealing with the problem of illegal foreign workers for decades, so I believe that it is high time that we fix the problem. If a foreign worker can do the job better and at a cheaper rate than a local worker, then as a developer I would surely choose to hire foreigners. The issue is when illegal workers come into play, the local:foreigner price- value equation goes out of sync. I believe legal foreign workers are not necessarily cheaper than local workers. If Malaysia wants to move forward as a developed country, the issue of illegal foreign workers will have to be curbed, even if it is at the cost of higher property prices. The higher prices will be justified by other benefits such as possible higher involvement of locals in the construction industry and the improvement of construction practices with lower reliance on labour.
Co-Founder and Director of Alpha Marketing
The resulting impact could be both good and bad. The upside would be that it creates demand for local workers, giving a boost to the otherwise quiet property market. This would result in job creation and create a spillover effect in other related industries such as retail, spending etc. Hence, the money that is spent on hiring locals will go around within the local economy. The downside would be an increase in property development costs as it is more expensive to employ local workers. This would result in higher construction costs and higher per sq ft pricing for properties.
iProperty.com’s brand ambassador (Iskandar Malaysia), property speaker and author
I personally do not think the freeze on the recruitment of foreign workers will affect property prices. The reason being that many developers have either been postponing their launches or putting new phases of existing projects on hold. The past six months have been seeing a very soft property market with few new launches and generally, below-target sales for most developers. A suspension/freeze is normally a temporary measure which might be lifted when the market begins to pick up again as the “buying mood” of consumers return. I believe that the market momentum will improve after the next quarter, possibly by July or August this year and I am confident that the government will revise this policy accordingly.
Dr Daniele Gambero
Co-Founder and CEO of REI Group of Companies
This article was first published in the iProperty.com Malaysia April 2016 Magazine. Get your copy from selected news stands or view the magazine online for free at www.iproperty.com.my/magazine. Better yet, order a discounted subscription by putting in your details in the form below!