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IMLC 2012: Creating investor friendly business destination 26 Sep 2012 12:00 am

Contributed by Tan Shang Neng

This is an engaging session featuring a dynamic group of experts from their respective fields contributing to the theme of the session. The session firstly sought to identify the global trends in the employment laws of the various legal jurisdictions in the Asian region. It then proceeded to identify the trends and regulation in the Malaysian context. It also sought to address the issues of foreign investment and the ‘brain-drain’ syndrome in Malaysia.

George Cooper (Partner, Ashurst, Singapore), a regional employment lawyer, started the session by highlighting that while the domestic employment law regimes in the various countries in the Asian region (such as Singapore, China and India) were very different, all were in agreement that there needed to be a reform or modernisation of the existing domestic laws to cope with the change in global trends.

The issue however, as Cooper pointed out, was that there was no consensus on which direction to head to – towards the capitalist’s free markets or the socialists; an open economy or the nationalisation of assets; open borders to foreign investments and talents or the fostering of local talents.

“Do we regulate more, or do we aim to deregulate? Where on that spectrum do we land, depends on the political leaders of the day.”

He said that there was a pragmatic and practical political imperative in developing countries that aimed for social stability. Therefore, the direct regulation and direct rise approach, rather than the free market and deregulation approach, would be a more distinct advantage.

In the Malaysian context, Kenneth Ho (Human Resources Director, IBM Malaysia) pointed out that while Malaysia ranked third on the AT Kearney Global Services Location index, 2011 (India and China ranking first and second respectively), it should not rest on its laurels.

Ho went on to suggest that in order for Malaysia to increase its labour market attractiveness, it would have to enhance its labour market flexibility. This involved adapting and keeping in line with changes in work trends and technological progression by enacting necessary regulations. For example, the government should consider legislations or guidelines that regulate the employer-employee relationship given that in some industries, an employee could work from home.

Ho also stressed the importance of upgrading the skills and abilities of employees, in particular increasing students’ proficiency in English so as to build their confidence even before they joined the workforce.

“Moreover, whether employees were local or from abroad, there is always a need to attract and retain top talents,” he added. In this aspect, Ho said that the Malaysian Immigration could improve on the time needed to approve work permits, especially when some applications can take up to a more month or more. “In Singapore, it takes only around three days.” 

The final speaker, Anand Ponnudurai (Partner, Bodipalar Ponnudurai De Silva) said that there was a fine line between creating an investment friendly environment and protecting the rights of the employee.

He explained that while the Malaysian employment provisions were still very minimalistic in terms of the protection it offered to employees, the concept in Malaysia was still very much entrenched in the security of tenure.

“Court decisions today may vary from court to court, especially when the Industrial Court, as a court of equity and good conscience, would adopt a vague measurement as to what is ‘fair dismissal.” 

Further, the government had passed an amendment to the employment provisions legislating that awards for back wages would be capped at 24-months, and that deductions would be made of such awards if there were contributing conduct by the workman or if he had managed to find suitable employment after dismissal.

Ponnudurai however noted that the impact of the relatively new legislations with regards to minimum wages and retirement age could not be adequately assessed as yet.

He went on to identify the various shortcomings of the labour law system in Malaysia. In particular, he illustrated the lack of an automatic right of access to the Industrial Courts for employees and the relatively long time it would take for a case to either be dismissed or decided.

“But then, since there was usually no order as to costs, this encouraged even weak cases to be brought against employers. Also, the Industrial Court’s enforcement of constructive dismissal/forced dismissal would give employees further basis to bring unfounded cases against their employers” he said.

These might be perceived by many as discouraging factors to foreign investors.

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