New Straits Times (Malaysia) | January 16, 2000 | By Marina Emmanuel
WHAT kind of foreign investor does Malaysia wish to attract in the 21st century?
Naturally, the country wants firms which respect the culture and laws of the land while serving as employers of choice.
But how do we contend with some fly-by-night operators who are intent only on raking in the money as fast as they can and, when the going gets tough, pack their bags and leave the local workers high and dry?
The news that more than 2,000 workers at Applied Magnetics Corporation's plant in Penang had a rude awakening on Friday when they returned from their month-long "vacation" and found themselves jobless was far from pleasant, especially in Penang -- home to many of the world's technology giants.
The presence of these companies -- some of which go back nearly three decades -- has been responsible for making Penang the "Silicon Island" and an economic powerhouse for all these years. In addition, these companies have generated jobs for close to 200,000 people.
Workers employed by the California-based company were greeted by a notice at their Bayan Lepas Free Industrial Zone factory on Friday, telling them that the independent supplier of disk drive components had ceased operations. They were told to collect their termination notices next week.
Applied Magnetics Sdn Bhd managing director Joe Philips was quoted as saying that the company was winding up its operations and "most employees will be retrenched".
He said the decision followed last week's announcement that the parent company had filed for protection under the Federal Bankruptcy Code in the United States.
"The company has been suffering losses for two years due to excess capacity and slow demand which prevented it from achieving its planned sales volume," Philips said.
While the financial problems of the company -- related in part to intense pricing pressure and excess production plaguing the disk drive and memory storage components industry -- are appreciated, the manner in which it handled the winding down activities in Malaysia leaves a lot to be desired.
"The company should have at least informed us earlier so we could prepare and find jobs elsewhere," said maintenance/engineering section employee Osman Samat, 38.
"Even before the shutdown, they had not been making EPF deductions from our salaries," he claimed.
Malaysian Trades Union Congress president Senator Zainal Rampak said the American company's "cowboy style" of setting up business here, and then leaving its staff in the lurch, was irresponsible.
"The companies that operate here must respect their workers and their contributions towards the high profits raked in by the firms.
"On our part, we must continue to show the world that as Asians, we are a dignified people.
"We must demand the respect which is rightfully ours and not allow ourselves to be treated badly by anyone ... at home or overseas."
The Applied Magnetics issue is not the first incident in Penang to hit electronics workers.
American removable cartridge hard disk technology leader SyQuest Technology Inc in 1998 executed a restructuring and streamlining exercise of its global operations to improve the company's performance.
Cost-cutting measures which included a workforce reduction at its Penang plant was done by violating section 63 of the Employment Act.
That section of the Act states: "Any employer intending to retrench workers must inform the Labour Office in the area which has jurisdiction 30 days before the retrenchment takes effect."
Malaysian Industrial Co-ordinating Committee member and former Free Trade Zone Penang Companies Association chairman Datuk Yap Peng Hooi contends that while market forces sometimes decide the fate of a company's presence in a country like Malaysia, sensitivity on the part of these companies when handling a closure of a factory is crucial.
"Companies do get into financial problems. But while in the US they can file under Chapter 11 of the Bankruptcy Code, they should be more sensitive to the local business and cultural environment.
On foreign companies filing for bankruptcy in their home countries, Yap said these companies must note that the situation does not apply in Malaysia.
"They must take into account the legal requirements Malaysia demands for local workers and respect these laws," he says.
In highlighting the need for a watchdog body to be set to monitor the operations of foreign electronics companies in Malaysia, a public interest lawyer says unions should be allowed to protect the interest of electronics workers here.
This, the lawyer argues, is in the interest of "industrial harmony".
"The presence of such bodies would allow the Government to remain investor-friendly, and yet look after the interests of local workers when they find themselves in situations similar to that of Applied Magnetics.
"Unions should be something we should consider, along with stronger labour legislation, to protect such workers."
The Government, she says, would also have more "bite" when it finds itself playing mediator between local workers and foreign employers who have been known to hide behind the veil of laws and regulations of their home countries which do not apply in Malaysia.
Is it not enough that Malaysia is an attractive offshore investment site with its good infrastructure, reasonably lower operating costs and other incentives for foreign investors?
These foreign investors should not take advantage of the fact that Malaysian workers are not generally a litigious lot when it comes to taking employers to court, unlike their counterparts in other countries.New Straits Times (Malaysia):
