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Migrant Workers in Malaysia’s Garment Sector Face Severe Exploitation

On Sept. 23, the Malaysian immigration department arrested a Bangladeshi garment factory owner, along with 45 illegal foreign workers, on suspicion of using fake temporary work permits obtained by hacking government systems.

The workers, aged between 17 and 67, consisted of Bangladesh, Indonesian and Myanmar nationals, according to immigration director-general Khairul Dzaimee Daud. Also arrested was a Malaysian director of the company, which authorities said has been generating revenues of 130,000-50,000 Malaysian ringgit ($31,000-$36,000) per month.

“The factory operators are believed to have used the visit passes suspected to have been obtained through the ‘ID Hack’ syndicate, to set up the garment factory in Malaysia, which has produced garments for markets in the Klang Valley and Selangor since 2012,” Khairul said in a statement.

The factory owner leased several commercial properties, including a cut-and-sew facility, a sales center and a three-story building that served as a dormitory, Khairul said. He added that the company employed illegal immigrants, who received a monthly wage of 1,600 ringgit ($383), to “maximize profits.”

“We understand that cottage industries like this can be found across Malaysia,” Andrew Korfhage, deputy vice president of strategic engagement at Transparentem, a New York-based nonprofit that investigates environmental and human-rights abuses in global supply chains.

Transparentem has been delving into allegations of labor exploitation faced by migrant workers who make clothing for brands such as Bonobos, Brooks Brothers and L.L. Bean in factories in Malaysia. In 2019, the organization flagged Imperial Garments and Pen Apparel, both owned by Hong Kong manufacturer TAL Apparel, for demonstrating signs of issues that the International Labour Organization considers indicators of forced labor, including deception, intimidation, abusive living conditions and debt bondage.

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Bangladeshi workers that Sourcing Journal spoke to shared similar stories: To secure jobs at one of these garment factories in Malaysia, they would sell off valuables or land or take on loans to pay recruitment agents thousands of dollars. At the airport, they would state on camera that they did not pay recruitment fees. In Malaysia, they found themselves living in cramped hostels, with an average of 10 people in a tiny apartment with a single bathroom and kitchen. They received roughly a monthly wage of 1,200 ringgit ($287), excluding overtime, though the factory would deduct 300 ringgit ($72) for housing, transportation and whatever it owed the agents on its end.

Their circumstances worsened after TAL Apparel shut down Imperial Garments and Pen Apparel, citing the loss of business due to the Covid-19 pandemic. While the company established a reemployment and repatriation program to help affected workers obtain new jobs in Malaysia or return home, progress has been spotty.

One worker, who was employed at Imperial Garments, told Sourcing Journal that he’s in a holding pattern while he waits to be transferred elsewhere. He’s still drawing a salary of 400 ringgit ($96), but it’s barely enough to subsist on. “Every other day, whenever my parents call, they ask, ‘Where is the money? The loan sharks are asking for money and we don’t know what to do right now,’” he said. He can’t go back to Bangladesh because he needs to keep working to pay off what he owes.

Another former Imperial Garments employee said he was tired of waiting and ran off to enlist with an electronics company even though he didn’t have the proper papers. He said he didn’t have a choice because his family was starving. “Imperial Garments destroyed my life completely,” he said. “After coming here, I had to make new loans. My loans are now cyclical; I have no way out. I’m depressed all the time.”

Presented with Transparentem’s original findings, TAL Apparel worked with some of its buyers to remediate some of the problems. One of them was the creation of a fund, which stood at $1.1 million as of last November, to partially reimburse workers for their recruitment fees. According to an update published by Transparentem in August, however, TAL Apparel told the nonprofit that its repayment plan had concluded in May, with total disbursements of $1,067,684 to 1,405 workers that not only fell short of the original amount pledged but was also likely less than the full amount workers were owed for the entirety of their recruitment fees. TAL Apparel did not provide information on how much workers had paid for their employment, Transparentem said, but it explained that it was unable to repay all eligible workers because some of them had left without notice, making it difficult to track them down.

TAL Apparel told Sourcing Journal that none of their factories has ever harbored forced labor or worker exploitation, but that it has been working with Transparentem to “look into” the recruitment practices at its Malaysian factories and aid workers affected by the pandemic through repatriation or reemployment measures. The company said its recruitment policies align with the latest International Labour Organization guidelines, and that it has been adhering to the so-called “employer pays” principle—meaning it bears the full cost of recruitment—for new workers since last January.

“The issue of responsible recruitment and employment is a complex one, especially in the context of globalized supply chains and international labor laws,” a spokesperson said. “TAL will persevere to work with other industry partners and NGOs to put in place even better practices to uplift our industry to higher standards of operations.’

Still, Korfhage said that migrant workers are vulnerable to exploitation because the lack of opportunity in their home countries leads them to seek work elsewhere. The deception that is involved in their recruitment “feeds into that desperation,” he said. Some workers might end up paying double recruitment fees if their employers seek to recoup their own costs from using agents. “The ​​recruiters are double-dipping,” Korfhage added. “They are getting money from the manufacturer as well as the workers.” Ultimately, however, it’s the workers who suffer.

TAL Apparel, Transparentem said, has taken “positive first steps” toward implementing a policy to ensure workers do not bear any cost for their recruitment fees, but the work is far from finished. TAL Apparel told the nonprofit that it is working with its factories in Thailand, which also depend on migrant laborers, to improve its recruitment practices, train staff about ethical recruitment and implement robust grievance mechanisms. Though buyers sourcing from facilities that depend on a migrant workforce should adopt lessons learned from Malaysia, Korfhage said brands should also consider their own roles in the equation.

“While some suppliers are willing to stop outsourcing their recruitment costs on the backs of their workers, many others need the pressure from their customers to do so,” he said. “It is within brands’ power to get us to a tipping point in the industry if they were to say, as a group, ‘Altogether, this is what we require, and everyone has to do it.’ Companies need to stop outsourcing the cost of recruitment onto workers, and to accept recruitment as a cost of doing business that companies must bear.”