MIGRANT workers, documented or otherwise, risk exploitation, violence and death just to be in Malaysia.
With nothing to lose and everything to gain — they make a living not just from taking up jobs not fancied by Malaysians, but also by setting up small businesses.
Between 2024 and Sept 30 this year, 25,124 foreigners were detained for illegally running 20 to 23 businesses they could not operate or own, in high-cash and low-barrier-to-entry sectors that form the "shadow economy". Small grocery stores and 24-hour convenience stores selling cheap imported goods are ubiquitous in residential flats, housing estates and commercial hotspots.
Relying on mobility and sidestepping brick-and-mortar investments, migrants sell fresh produce, fruits, garments or cheap electronics at night and farmers' markets, and leverage their cultural and culinary backgrounds to run small coffee shops and restaurants. Operators also use unlicensed, back-alley "cloud kitchens" to supply cuisine all day long.
They also form barber shops and hair salons, automotive maintenance hubs, laundrettes and cleaning services in rented spaces. Meanwhile, some of them run dubious clinics to treat fellow migrants who fear unwanted exposure in public hospitals.
Thanks to "Ali Baba" proxy arrangements with unscrupulous Malaysians, shops can be up and running practically overnight.
The Inland Revenue Board estimates government losses of RM70 billion annually in uncollected taxes from the shadow economy. There are no earnings, personal or corporate, to be declared from this cash-only network.
A stall at the Selayang market or Jalan Silang can pull in an estimated RM20,000 to RM100,000 in monthly revenue. Conversely, legitimate Malaysian small businesses operate on a tight 20 per cent profit margin, so they are bound to be aghast at having to compete against migrant businesses netting as high as 60 per cent margins.
Migrants are able to evade the RM1,850 annual levy, statutory worker contributions and recruitment fees while paying salaries far below the minimum wage.
Profits are immediately remitted to home countries through informal and unmonitored channels that bypass the domestic banking system.
Bank Negara Malaysia estimates that RM32.6 billion is remitted annually, but the Malaysian Employers Federation puts the figure at closer to RM70 billion.
The bigger question is: how do these migrant businesses continue operating despite active enforcement, raids and arrests? The authorities haplessly police every known business premises, but are hampered by non-deterrent penalties that allow migrants to easily reopen under different names.
As long as Malaysians decline dirty, dangerous and demeaning jobs in construction, plantation, manufacturing and domestic work, migrants will fill the void, creating an ecosystem of customers for migrant businesses. The shadow economy thrives because Malaysians are complicit in it.
© New Straits Times Press (M) Bhd