KUALA LUMPUR, Sept 14 — The Immigration Department’s plan to freeze the assets of firms that employ illegal workers would damage the local economy, said the SME Association of Malaysia when conceding the prevalence of the practice.

Association president Datuk Michael Kang warned that the move could force firms to close, and said the hiring of illegals was "because the cost of rehiring foreign workers is too high and the procedures too rigid”.

"Currently, 70 per cent to 80 per cent of SMEs have illegal workers because it is too expensive (not to do so) and there is no guarantee they will be supplied with legal workers,” he was quoted saying by local daily The Star, adding that there should be a proper system for the employment of foreign workers.

According to The Star, there are about 650,000 SMEs in Malaysia.

In the same report, Federation of Malaysian Manufacturers president Datuk Seri Saw Choo Boon said the government should simplify the rules and procedures for hiring foreign workers and extending their work permits.

He also asked the government to introduce firm and long-term policies on the hiring of foreign workers.

"If not, there could be irreparable damage to the industry,” he said.

In a separate report by local daily New Straits Times, Malaysian Employers Federation (MEF) executive director Datuk Shamsuddin Bardan was quoted saying that the government’s enforcement action would likely affect the construction industry, smallholders in the palm oil industry and retail trade industries.

Local papers reported Immigration Department director-general Datuk Seri Mustafar Ali as saying that his department is giving employers until the end of this month to get their foreign workers’ travel documents, visas and work permits in order.

Mustafar said the existing law allowing his department to freeze the assets of employers hiring illegal workers is not new, but will be fully enforced from next month onwards.