Relationship of Unemployment Rate and Remittance with Indonesian Immigration in Malaysia

Abstract

Malaysia is among the countries that rely heavily on foreign workers whose origin countries are mostly Indonesia, Bangladesh and Nepal. Indonesia is one of the world’s major sources of labour supply. Thus, the paper aims to investigate the flow of Indonesian Immigration to Malaysia based on two selected factors, which are the unemployment rate in Indonesia and remittance received by Indonesia. There is a high unemployment rate in Indonesia, which is approaching 5.9 percent in 2014, and the amount of remittance received in Indonesia is also huge, around USD 8,551,164.47 in 2014. Simultaneously, there are a high number of Indonesian immigrant’s workers in Malaysia, and it remains as the large share in the registered foreign workers in Malaysia, which is around 39 percent in 2014 and 2015. Thus, the purpose of this research paper is to study the relationship between Indonesia’s unemployment rate and remittance with the migration flow of Indonesian citizen into Malaysia, with the focus that unemployment rate in Indonesia will be the push factor of emigration while the remittance will become the pull factor to the Indonesian migration to Malaysia. The secondary data used is from a period of 1982 to 2011. The variables involved will be Indonesia’s unemployment rate, its remittance and the number of foreign workers in Malaysia. From the result, the paper found that both independent variables have a significant relationship with the immigration flow of Indonesian citizen to Malaysia. When the unemployment rate in Indonesia is high, the nation tends to seek for opportunities of employment in Malaysia or other countries. On the other hand, when there is more remittance received by Indonesia, the motivation goes to their citizens to work or stay abroad.