QUESTION TIME Any which way one chooses to look at it, the new agency fee for maids from Indonesia to work in Malaysia of RM8,500, some 90 percent higher than that proposed earlier, is ridiculously high and reflects gross exploitation of both employer and maid.

And what is ludicrous is that the Malaysian Association of Foreign Maid Agencies or Papa claims the figure reflects what the market is prepared to pay for getting Indonesian maids. If indeed that is the case, it is a market which is heavily rigged, perhaps even more so than some counters on the stock market!

The Malaysian Maid Employers Association or Mama has understandably described  the figure as not only unreasonable, but burdensome, too. And indeed it is.

An Indonesian maid’s salary is RM700 per month, less than the minimum wage figure of RM900 per month. A contract is for two years and the sum she earns over that period is RM16,800.

That means, agency fees paid by the employer and the maid of RM8,500 amounts to half of the maid’s salary over two years, which is really too much. This is an exorbitant sum for a commission agent to take.

While Papa maintains its costs are high, a comparison with Singapore shows agency fees to be a lot lower there, despite much higher salaries of about RM1,100 or more per month paid there. Website checks indicate agency fees to be between RM750 and RM1,500, putting the average agency fee at around RM1,125. This excludes levies that are paid to the Singapore government.

What is the justification for the agency fee in Malaysia to be as high as almost eight times than that in Singapore? The answer has to be none.

The salt on the wound is that the current agency fees are a steep increase from the RM4,511 agreed in a bilateral deal between Malaysia and Indonesia, which is already four times higher of that in Singapore. Of this, maids still had to pay RM1,800 with the remaining RM2,711 paid by the employer. This was thought to be much more reasonable for employers, but maids could not be obtained at this price, it was claimed.

One can conjecture whether those responsible for procuring Indonesian maids, both agencies in Malaysia and those in Indonesia, conspired to create a shortage to engineer an increase in prices. It seems to be the only possible explanation for the subsequent sharp increase in fees.

The amount that employers had to pay under the new arrangements (announced by Papa and not the Human Resources Ministry, the usual agency for such announcements) requires employers to pay RM6,700 - a hefty 2.5 times the RM2,711 proposed under the bilateral agreement. Maids still had to pay a further RM1,800, unchanged.

Agency fees to rise 88pct

Overall, the new agency fees of RM8,500, including the RM1,800 to be paid by maids, is a massive 88 percent higher than the RM4,511 proposed under the bilateral agreement between Malaysia and Indonesia.  

According to news reports, Human Resources Ministry secretary-general Zainal Rahim Seman said that the government will not interfere in the new fee structure fixed by Papa based on market forces, for now.

It is extremely lamentable that Zainal parrots the Papa line and keeps completely mum on why the government went back on its earlier announcement, and now seems to agree that the price based on market forces is RM8,500.

It is time Mama, which represents maid employers, made a complaint to the Competitive Commission that Papa is acting as a cartel by fixing maid agency prices and turning the tap off on maid availability.

If indeed agency fees are to be determined by the market, then there must be open access for anyone to become an agent and for Malaysians to hire maids directly if they chose to. Only under such free market conditions can one talk about a market price. Papa’s market price is one based on a controlled market and is therefore, false.

It is time the government took firm measures to liberalise the maid market. If current maid agencies are not willing to bring in the maids at these prices just open up the market to other agencies. If agency fees can be cut to RM2,000, still higher than that in Singapore, the savings in agency fees is RM6,500 over two years.

That savings can be used to give a better deal for maids by requiring employers to pay at least minimum wages to them which is RM900 a month. That would cost RM4,800 over the two-year contract period, still leaving a savings of RM1,700 (6,500-4,800) overall.

If the new salary is given, the average Indonesian maid now will get RM21,600 (900X24) over two years. Previously, she earned RM16,800 over two years (RM700X24), less than the RM1,800 she had to pay as agency fees or RM15,000 net. The maid’s new salary over two years is 44 percent higher.

This simple analysis shows that it is possible to give Indonesian maids a much better deal while not burdening the employer too much. The key is to reduce agency fees here and in Indonesia to reasonable levels. But is this too much for the governments of both Malaysia and Indonesia?       

P GUNASEGARAM has been a journalist and analyst for over 30 years. In the coming months, he will help set up KiniBiz , an independent business news portal, in a joint venture with Malaysiakini .