Lesson from Indonesia for Malaysia

Economic insecurity means political danger

By Liew Chin Tong / theedgemalaysia.com

17 Sep 2025, 12:00 pm

The recent protests in Indonesia expose a serious socioeconomic root cause: millions of people work in the informal sector, especially as gig workers, and face low wages as well as the lack of opportunity in the formal sector.

And a day before a young Gojek rider Affan Kurniawan was killed during one of the Jakarta protests, the Malaysian Parliament passed the first-ever dedicated gig worker legislation.

The Gig Workers’ Bill 2025 mandates contribution to social security funds and creates a form of tribunal to handle the grievances of gig workers. Human Resources Minister Steven Sim and the Madani government deserve compliments for this pathbreaking action.

The consensus among Members of Parliament (MPs) is that the government should strengthen protections for gig workers while also expanding access to better-paying, stable jobs for all Malaysians beyond the gig economy.

I know that all MPs who debated the Bill understand very well that:

Prior to the Bill, the 1.2 million Malaysians working in the gig sector were not protected at all; and

The fact that these 1.2 million workers (of a total labour force of 17.43 million as of June 2025, according to the Department of Statistics Malaysia) had to resort to gig work, which consists of insecure jobs without much social protection, reflects a deeper problem of our economy that we have to confront together as a nation.

Now, the challenge is to get this message across to the government and its agencies, businesses and society at large, and make bold changes.

Many Malaysians (and Indonesians for that matter) are doing food delivery and e-hailing jobs because the formal sector has failed to create sufficient jobs or pays too little. To make things worse, as the formal sector is full of unskilled foreign labour which depresses wages further, Malaysians who are unskilled or even semi-skilled are caught in a downward spiral.

All options are poor for them — either work in a factory with low pay and be told every day that they are not as “competitive” and “hard working” as foreign workers or become temporary contract workers as delivery or e-hailing drivers.

However, this is not just a downward spiral for unskilled and semi-skilled Malaysians. Due to a generally low pay level, Malaysians with better skills or with tertiary education prefer to work in Singapore.

There are 1.1 million Malaysians working in Singapore, many of them in jobs that, ironically, Malaysian employers claim that Malaysian workers refused to do. A total of 97,318 Malaysians have renounced their citizenship to become Singaporeans between 2015 and June 2025, according to the Home Ministry.

At home, the continued reliance on unskilled foreign workers is also resulting in a lack of productivity gains across Malaysian industries.

Some Malaysian employers’ thinking is quite outdated — when they claim that our workers are not productive, they are still referring to productivity as how many hours a worker puts in. Today, productivity is about how much technology content the production process includes.

At the same time, many industries in Malaysia and the Southeast Asian region are certainly facing an existential crisis due to these combined effects:

First, involution among China’s industries resulted in not just a domestic price war but also one around the world, hitting Southeast Asian manufacturers especially hard. For example, this can be seen from the closure of textile factories in Indonesia, which in turn may have, to a certain extent, contributed to the recent upheavals.

Second, the Trump tariffs force products previously destined for the US market to find other markets, triggering downward price pressures through oversupply. We already saw these “second-order effects” in the steel industry, which has been facing a 50% sectoral tariff imposed by President Donald Trump since March.

Third, technological advancements and innovations are sweeping China’s industries at a very fast pace, especially with the adoption of artificial intelligence in production. For instance, the Malaysian glove industry is not as advanced in technology compared to manufacturers in China. One of China’s largest glove manufacturers will start production in Vietnam soon and the Malaysian glove industry is potentially facing an existential crisis.

The Malaysian government, the industries and the workers will need to forge a new consensus quickly as economic insecurity is a political tinderbox, as shown in Indonesia recently.

While most of us are keen on repeating the mantra of “cost of living” as the main issue of our livelihood, the reality is that the problem is not only about the cost of living but also about low pay and low purchasing power (as a result of the low pay) as well as the lack of decent public services.

Due to poor public transportation, many people are forced to own a car while long waits at public hospitals push many middle-class people to private hospitals and private medical insurance. The lack of decent housing resulted in Malaysians being heavily indebted to own a house, enriching developers but burdening ordinary households. The lives of ordinary folks have been “financialised”, in the words of a Khazanah Research Institute report.

These are the realities we should all be keenly aware of:

First, pay in Malaysia is low and it has become a political problem.

Second, low wages and the dependence on unskilled foreign labour are resulting in Malaysian industries not acquiring technology as fast as their Chinese counterparts. This is now a serious and immediate challenge as China’s involution-driven price war has regional and global implications.

Third, the “cost of living” political problem will not be resolved by suppressing prices but by dealing with low pay and the over-financialisation of our daily lives.

Let me draw your attention to how nations work out new economic compromises and consensus. In the 1950s, when South Korea felt the constant threat of North Korea, land reforms were carried out to ensure that the poor did not feel the need to become Communist.

The welfare state of Europe was most acceptable to everyone and even championed by the capitalists, when the Soviet Union’s economic model was deemed sufficiently robust in the 1950s and 1960s to become a realistic alternative.

However, with the end of the Cold War, such focus on ensuring equitable development was abandoned by the 1990s, mostly through the practices of unrestricted free market economics and tax cuts for the rich, promoted by former US president Ronald Reagan and former British prime minister Margaret Thatcher.

The initial period of Malaysia’s New Economic Policy in the 1970s paid a lot of attention to reducing inequality between ethnic groups as well as intra-ethnic groups. The focus on reducing inequality was forgotten by the mid-1980s when the government of Tun Dr Mahathir Mohamad bought into Reaganomics and Thatcherism.

As I mentioned in the opening of this article, people’s sense of economic insecurity, especially among the working-class majority, can easily lead to political unrest. The time has come for a new economic consensus to be built to respond to economic insecurity, which is now posing a serious political danger.

Liew Chin Tong is the Deputy Minister of Investment, Trade and Industry

Note from the blogger: 

After GE15, this blogger foresaw a looming problem of economic insecurity. Addressing the fundamental structure of the economy should be utmost priorty of government. Politicking need to be kept at bay and the political leadership should set a good example. 

Hope that explains for the change in the tone and inclination of this blog and the precedent blog after 2021.