Approach could streamline recruitment while improving transparency, accountability
PETALING JAYA: A proposed direct hiring system for foreign workers could ease Malaysia’s long-standing recruitment woes, from high costs to worker exploitation, but its success would hinge on strong governance, employer readiness and sustained institutional support, said Universiti Malaysia Kelantan human resource expert Prof Dr Balakrishnan Parasuraman.
He said allowing employers to hire foreign workers directly through a government regulated platform could streamline recruitment while improving transparency and accountability.
“By reducing reliance on third-party intermediaries such as hiring agents, a direct hiring system could help lower recruitment costs and reduce the risk of exploitation.
“It may also limit opportunities for illegal fee-charging and document irregularities, while improving accountability and traceability in the recruitment process.”
Balakrishnan added that recruitment conducted through a regulated platform would clearly establish employer responsibility for wages, contracts and working conditions, potentially reducing disputes linked to labour violations.
“The approach is broadly consistent with International Labour Organisation principles on fair recruitment and could support Malaysia’s efforts to strengthen its international standing, particularly in sectors subject to closer labour compliance scrutiny.”
It was reported on Wednesday that the Human Resources Ministry is formulating a pathway to allow local employers to directly hire foreign workers, in a move to eliminate third-party agents from the process.
Its minister Datuk Seri R. Ramanan said the proposed mechanism, which is still being refined, would be discussed with the Home Ministry and key stakeholders before being submitted to the Cabinet for approval, adding that the role of recruitment agents has long drawn concern from MPs and the media for exposing workers to exploitation, including debt bondage and elements of modern slavery.
However, Balakrishnan said employers – especially small and medium enterprises (SME) – may struggle to transition away from long-established, agent-led recruitment models.
“Smaller businesses often have limited human resource capacity and may find it challenging to manage recruitment processes involving documentation, immigration compliance, contract preparation and coordination with foreign authorities.
“This could increase the risk of administrative errors, non-compliance and delays.”
He also said while direct hiring could reduce recruitment costs over time, the initial transition may be time-consuming and resource-intensive for smaller firms, due to training needs, system adjustments and unfamiliar digital platforms.
“There are also potential legal and reputational risks if employers are not fully familiar with evolving regulatory requirements, particularly in relation to wages, contracts and work permits.”
On recruitment costs, Balakrishnan said the proposed system could help curb the high fees often paid by foreign workers by simplifying the recruitment chain.
“Placing recruitment within a government regulated framework could make costs more transparent and predictable.
“However, this would need to be supported by clear cost guidelines, mandatory disclosure of recruitment-related expenses and, where feasible, policies to minimise or eliminate fees borne by workers.”
He emphasised that effective enforcement would remain critical, including audits, penalties for non-compliance, accessible complaint mechanisms and cooperation with labour-sending countries to address hidden charges.
He also said beyond costs, the system must tackle persistent issues such as job mismatches, contract substitution and post-arrival changes to employment terms.
“Clear, standardised and translated contracts from the pre-departure stage, with any changes requiring documented consent and regulatory approval, would be important safeguards.”
He said broader concerns, including delayed wage payments, unlawful deductions, living conditions and retaliation against workers who lodge complaints, must also be addressed.
On the use of artificial intelligence (AI) for real-time translation during interviews, Balakrishnan said the technology could help reduce language barriers and reliance on intermediaries, but should be applied cautiously.
“AI translation could be useful for commonly spoken migrant languages, but it should complement, not replace, human oversight, particularly when explaining contracts and employment terms.”
At the same time, he acknowledged that recruitment agents have traditionally played a role in bridging information gaps between employers and labour-source countries, particularly for SME unfamiliar with overseas education systems and skill standards.
“This highlights the importance of strong governance.
“Whether recruitment is conducted directly or through third parties, transparency, integrity and effective oversight remain critical.”
Ultimately, he said the success of direct hiring would depend on close coordination among ministries, embassies and regulatory agencies.
“A well-coordinated, one-stop system would be key. Without this, delays and mismatches could continue, affecting both employers and workers.”
