Myanmar's decision to stop supplying labour to Malaysia is "unfair and disruptive" to business, the Federation of Malaysian Manufacturers (FMM) said today.

It said employers had already incurred recruitment costs, including medical, insurance, levy advance and travel expenses.

The Myanmar government on Tuesday announced a halt in sending workers to Malaysia amid a diplomatic row over the Rohingya issue.

"A recall amounts to a breaking of the employment contract, which employers would unlikely be compensated for the premature termination," FMM said in a statement.

As such, it urged the government to consider giving employers approval to replace the Myanmar workers they had already started recruiting, but now could not hire.

It said the ban on new workers would worsen the shortage caused by the policy to only allow case-by-case approvals for recruitment.

It said 70 percent of foreign workers employed in the manufacturing sector were from Myanmar.

Myanmar yesterday summoned Malaysia's envoy to the country on Prime Minister Najib Abdul Razak's attendance at a pro-Rohingya rally on Sunday.

Refugees described mass killings, rapes and torture, purportedly perpetrated by the military, but the Myanmar government blamed local militants instead.

Former United Nations secretary-general Kofi Annan, who visited Rakhine on the invitation of Myanmar leader Aung San Suu Kyi, said the situation was not genocide, as widely reported.