The Sustainable Solution to Malaysia’s Refugee Crisis Through Trade & Economic Inclusion



In identifying the absence of a comprehensive and sustainable approach to the refugee crisis, and the current developments in failing to establish a system of responsibility-sharing — particularly in the distribution of social and financial cost of hosting refugees — this paper explores international trade law and other trade measures-based options that could be recommended to assess the possibility of trade concessions and duty relief.

The scope of study will be based in the Malaysian context on the region managing its refugee population, and will be accompanied with observations on the Marrakesh Agreement in 1994, the EU-Jordan Agreement in 2016 and Uganda’s Open-Door Policy. This report will pursue a narrative that suggests the Southeast Asian nation invest in trade and economic inclusion of its refugee populace.

Furthermore, it is with the intention of the writer that this paper (1) profiles the refugee reality in Malaysian policy; (2) assesses the economic impact of refugee labour; and (3) explores the laws and treaties of international trade that are consistent with providing economic sustainability for the host country, Malaysia, in managing its forcibly displaced communities.


Chapter Objective: To profile the refugee reality in Malaysian policy

Consistent with its British colonial past, Malaysia has been, and continues to be, a major destination for migrants and refugees. The culture of foreign labour was introduced and popularised by Britain’s foreign policy to supply and accommodate the industrialising Western empire. It brought about an economic growth associated with labour-intensive production, where the improvements in transportation and communication networks came shortly after. Upon their independence, Malaysia was posed with the challenge to grapple with a framework that could govern the local people and the resurgence of migrants within the country — which has, since, surged due to political, ethnic and religious unrest beyond the borders.

In its many pursuits to establish policies addressing labour-migration, human trafficking and any other area pertaining to the trickle-down effects of an open-border-like system, this chapter would, instead, focus on Malaysia’s response to the growing refugee population and the international governing standards of dealing with people of trauma within the objective to illustrate the refugee reality in Malaysian policy.

The overview of the country’s legislation of foreign migration dumps recognition into two categories. (1) The documented or “legal” migrant is referred to a person staying on a temporary basis, and one who holds a form of official documentation like a passport, visa or a work permit. (2) The undocumented or irregular migrant who is, most likely, “illegal” because of circumstances beyond his or her control — alongside overstaying tourists and victims fleeing persecution. In a nutshell, Malaysia has not equipped itself with a clearly defined mechanism to address the refugee population within their borders.

The historical and contemporary perspectives of international migration in Malaysia has been recognised in three phases during the colonial period with British hegemony. During that era, legislations were enacted to “regulate the admission of aliens in accordance with the political, social, and economic needs … of the various administrations in Malaya” and “provide a means of registering and controlling alien residents in Malaya”.

This was later followed by an Immigration Ordinance (IO) that personalised entry for specific immigrants coming into the country. The country’s independence in 1957 had, since, enacted legal mechanics and regulations that are (1) based on race and gender, and (2) specified in nationality and occupational category. The British’s Divide and Conquerstrategy in response to foreign migration had stroked the growing nationalism among Malays, emphasising on a narrative that race and occupation determines the economic role of a migrant in the country.

The historical events that narrate the first entry of foreign people into the land, and the political and social responses that came after provides the necessary insight to understand Malaysia’s refugee crisis. The country had a little over six decades to address international migration, where in that time, the 1959 Immigration Act, the 1968 Employment Restriction Act, the New Economic Policy (NEP), and articles from Malaysia’s Penal Code were implemented to provide the necessary structures to govern this population.

This development, however, has been extended to refugees and victims of human traffickers and trauma as there is no local system that recognises the refugee or asylum-seeker status in accordance to the 1951 UN Refugee Convention or its 1967 protocol. As it would seem, the cooperation between the Malaysian government and the UNHCR is limited to NGO work and public assistance.

There have been calls to table and enact other mechanics to address the refugee situation in Malaysia. The impacts of the global pandemic, for example, has seen a wave of online hate speech towards the Rohingya community — so much so, that the Pakatan Harapan party proposed a Harmony and Reconciliation Commission earlier last year. It was an effort to seek reconciliation between the concerned groups without involving the standard authority, who may not be equipped to deal with the refugee narrative. This has, since, been scrapped by the ruling Perikatan Nasional party.

The conversations about the refugee reality has become as politicised as issues on race, ethnicity and religion — which are considered extremely sensitive topics in Malaysia. The local shift towards localising the crisis by addressing it through the lens of a Malaysian has altered the attitudes of the local people. This, at mass, determines the politics that govern a nation, and the policies that are pursued both nationally and internationally.

To put this theory into perspective, the growing xenophobia has accommodated a hyper-nationalist government who cements their image as a Malay-Muslim majority party, who prioritises local demands by tapping into the anti-refugee sentiment through an unnecessary wave of migrant and refugee crackdowns.


Chapter Objective: To assess the economic impact of refugee labour

In April 2019, the Institute for Democracy and Economic Affairs (IDEAS) published a report on the economic impacts of granting refugees the right to work in Malaysia. This chapter will discuss the findings of this research, consistent to the objective of assessing the effects of investing in refugee labour.

The first section of the report identifies the different refugee populations in Malaysia — from the Chams who escaped the Khmer Rouge genocide, the Filipino refugees from Mindanao, and the Achese from neighbouring Indonesia — as a brief illustration to demonstrate the varying attitudes of the Malaysian government towards the treatment of refugees, depending on the political context, cultural factors and economic need.

The Rohingya refugees, on the other hand, while having been coming in since the 1990s, have been more or less “tolerated” in Malaysian society. They take up about 86% of the registered refugee and asylum-seeker population.

The report found that despite not having the legal right to work, a majority of the UNHCR refugees are males of working, taxpaying age, engaged in informal employment to cover their basic needs. As they receive no welfare from the local government, and foreign and NGO aid is insufficient, they often resort to working illegally in dangerous and difficult jobs.

It was also observed that their limitations to employment activities are directly resulted by their legal right to work. This reality cuts off the ability for refugees and asylum-seekers who possess higher skill levels to put them to good use. It was reported that about 11% of Rohingya refugees working in the construction sector have had primary education, with a 1% who’s taken up some level of tertiary education as well.

The impacts of legalising work opportunities for refugees on public finances could provide the necessary stability and resources that a majority of the population may have trouble accessing, due mostly to their unaffordability to services like healthcare and education.

Within this very narrative, IDEAS brings forward the costs of not legalising working opportunities and, essentially, implementing a structure to manage the crisis.

The cost of detainment and arrest, for example, was quoted to range between RM35 to RM75 per person, per day, and this amount would total up to RM26 million per year. The paper also mentions the costs of the “wear and tear of public infrastructure” — an effect that theoretically comes with the refusal to acknowledge the problem at hand.

The proposal that legalising refugee labour could contribute to economic growth largely comes from the fiscal contribution of paying taxes. The Malaysian Human Rights Commission (SUHAKAM) has reported a 58% count of refugees earning a wage between RM500-RM1000 per month, with a 26% earning less than RM500. However, as their informal work is illegal and not recognised by law, the working refugees are not entitled to pay taxes.

Their impact on consumer spending, on the other hand, has been reported to bring about substantial economic benefits to both the local and refugee community. Their access to better managed incomes can enable them to invest in higher quality goods and services that would, in turn, raise their overall quality of life. This would essentially translate into profit and income growths for companies involved in producing these goods and services.

An additional impact to granting refugees the right to work is also the increase in labour supply. Theoretically, a growth in available workers could reduce wages, which would, then, lower the overall costs for production.

The realisation that this report has brought towards the potential value of the refugee population on the local economy has driven the establishments of multiple initiatives like Women For Refugees (WFR) — an NGO that provides classes and workshops on business literacy and leadership skills to refugee women — further shifting the mainstream narrative to an economic concern from a humanitarian one.


Chapter Objective: To explore the laws and treaties of international trade that are consistent with providing economic sustainability for the host country, Malaysia, in managing its forcibly displaced communities

There was an estimated 65.3 million people who were forcibly displaced in 2017. The population consisting of refugees, migrants and displaced people had demonstrated the human tragedy on a global scale, and the financial and social burdens of setting up shelter in destination and transit countries. As reported by the WTO’s Aid for Trade Global Review summary report, the response directed to allevate this burden was to offer short-term assistance like donations and other forms of financial aid.

The conversation surrounding the refugee crisis and the role of international trade has since expanded into narratives that suggest refugee-host countries harness trade relief measures to provide a more economically-viable solution to their foreign communities.

It is an even bolder suggestion to suggest that there be a reduction of import duties on selected goods and services produced and manufactured by the refugee/migrant community in host countries. The direct impact of the trade measure would possibly encourage employment and provide the necessary revenues for the displaced person to properly integrate into the local economy and society.


The idea to start considering trade policy as a mechanism in assisting the integration of refugee/migrant communities into their host countries has only been recently proposed in 2017. It was suggested that the fostering of economic initiatives through trade policies would allow marginalised societies to self-sustain through a legal income programme. This was run on the assumption that the investment in economic resilience would require a host country to adopt local policies to accommodate and acknowledge refugee livelihoods as an investment in itself.

To reference the 1994 Marrakesh Agreement, it was understood that it could not provide the necessary strategy to initiate humanitarian situations. The Agreement had clearly lacked the provisions to accommodate the context of refugees and migrants within a trade policy that would allow concessions for goods produced in refugee camps.

In relevance to the commonly known Most-Favoured Nation (MFN) obligation, the suggestion to be excluded from an equivalent treatment on duties, taxes and regulations in the context of refugee or migrant relief, has yet to be picked up and tabled. Turkey and Qatar’s 2017 proposal to link trade and humanitarian relief to the Syrian crisis had pushed for the international role of WTO members in alleviating the impacts of humanitarian tragedies.

While the directions for the proposal was vaguely spelled out, there was the option for a general waiver from WTO obligations to selectively allow trade concessions for host countries. This, within context, would imply that an advantageous avenue is instead provided to smoothly defer from upholding the obligations set under the WTO.

Respectively, this “waiver” would fall under the “enabling clause” found in Article IX of the Marrakesh Agreement, which would essentially allow for the wavering of WTO member obligation under an exceptional circumstance. In consideration towards the magnitude of the refugee crisis and the cost it bears to host them, this could technically qualify as an exceptional circumstance.


The other option to trade and humanitarian relief could be found in existing bilateral trade agreements. An appropriate example is the duty relief scheme proposed in the 2016 EU-Jordan Agreement, that was geared specifically towards the Syrian refugee crisis.

This bilateral approach is designed to provide a temporary preferential treatment to specified development and industrial zones of refugee and migrant communities. This “temporary relaxation” would alleviate the costs of hosting refugee and migrant populations. It is operated in a way where tariff is reduced and opportunities in the workforce is specifically allocated.

While the EU-Jordan Agreement has been hopeful in bridging the gaps of trade and humanitarian assistance, the results of the now four year project has been relatively disappointing: the inadequate experience in refugee/migrant designated zones has attributed to the lack of manufacturing operations; the inaccessibility of skilled marketing personnel; and the production of goods that are not able to meet the EU standards.

Be that as it may, there remains to be several steps to take when applying this framework into the Malaysian context. On deploying trade-relief schemes under bilateral trade agreements, Malaysia must, first, be in a position of marketing and distribution competitiveness to tap into the opportunities provided by these trade preferences.

They must, secondly, invest in the training and education of refugees in regards to the workforce they will be employed at.

Third, the offers of employment must be accompanied with an attractive wage and labour condition, where refugees and migrants are encouraged to participate in, and not partake in informal occupation.


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