By Mak Yuen Teen
On 23 September 2022, I attended the conference “Investment Stewardship in Times of Heightened Sustainability Demands” organised by the Institutional Investors Council (IIC) and Securities Industry Development Corporation (SIDC) in Kuala Lumpur. I was honoured and privileged to be a panelist and was impressed with the frank discussions of ESG issues both during the sessions and on the sidelines. It was very refreshing to see companies that have been in the spotlight for ESG issues not shying away from the conference, knowing that they may be confronted about their past infractions. I had a private conversation on the sidelines with the managing director of a company I had written a case study about regarding its corporate governance and ESG issues. I came away from the conference thinking that it augurs well that key stakeholders in Malaysia acknowledge the ESG failings and the need to do better. It is important to look forward rather than keep looking at the past.
In this spirit, I have included the case study on ATA IMS below. This case is not included in Volume 11 of the Corporate Governance Case Studies coming out on 19 October 2022, but I believe it should be made available. There were clearly failings on the part of the companies and other stakeholders. Some of these “failings”, but by no means all, have to do with differences between local regulations and norms, and international standards.
Malaysia is not alone in having local regulations and norms that may not be in line with international standards. I very much doubt that the continuing practice of some Singaporean companies transporting migrant workers in an unsafe manner meets international standards.
I would like to invite the Singaporean reader to compare accusations of forced labour practices levelled against Malaysian companies, such as ATA IMS in the case, with how we treat foreign domestic workers (FDW). These companies are accused of putting migrant workers in “debt bondage” situations through high recruitment fees. As a result, the migrant workers take a long time to pay off their debts. Do we not also have FDWs receiving low wages for several months as they pay off “agent fees”? Are we not practising a form of “debt bondage” too? I have a relative in Malaysia who requires 24-hour care and the family has to employ two FDWs. I was surprised that there is no deduction from the FDWs’ wages and all the recruitment fees are paid by the employer. In that regard, it seems Malaysia treats FDWs better than us (and their wages are comparable to what they get here). I understand that this is the situation for hiring of FDWs in HK too.
Some Malaysian companies, again like ATA IMS, were accused of keeping the migrant workers’ passports and this is considered part of forced labour practices. I recall that in the past, the FDW recruitment agency here advised us to keep the FDW’s passport. If I recall correctly, we were told that we will be held responsible and will pay a financial penalty if our FDW decided to “run away”. So it was common practice here for the employer to keep the FDW’s passport.
In the past, local companies will generally follow local regulations and norms. These are often far below international standards and some practices are frankly unacceptable. But the world has changed, as companies such as ATA IMS have discovered to great cost. Companies exporting to markets that have “forced labour” laws, or those which are suppliers to international companies subject to such laws or to reputational risk from accusations of unfair labour practices, have no choice but to significantly improve their practices. But all companies have a moral obligation to treat their employees, including migrant workers, fairly and with dignity.
I sensed a lot of soul-searching about treatment of foreign workers when I was at the conference in KL and from conversations with investors and companies, and a strong desire to make things better in Malaysia. I hope we in Singapore will do likewise, rather than think we are much better than Malaysia.
