The cyclical pattern of Bangladesh -> Malaysia migration

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Migration from Bangladesh to Malaysia has followed an interesting pattern over the past 25 years.

Malaysia is a significantly richer country that Bangladesh. In Bangladesh 90% of people live on less than $10 per day, compared to only 9% in Malaysia. Bangladeshis who are able to migrate to Malaysia to work on palm-oil plantations are able to double their wages - so demand is extremely high from Bangladeshis for the opportunity to migrate to Malaysia to work.

Malaysian palm-oil companies need labor, so it would seem there is a clear win-win here. But every 5-10 years, Malaysia halts immigration from Bangladesh to Malaysia. this has happened in1996, 2001, 2008, 2018, and most recently in 2024.

It turns out that a cyclical pattern has emerged:

  • The governments of Bangladesh and Malaysia reach an agreement to allow Bangladeshi workers to migrate to Malaysia on temporary visas

  • The supply of Bangladeshi workers wanting to move overwhelms the capacity of the government to match them to jobs

  • Middlemen assist migrants to go outside the system. Sometimes they actually matching people to jobs (just without proper paperwork), and sometimes they invent fictitious jobs. And to do this higher-risk migration, migrants are actually willing to pay at least 5x the normal migration cost

  • In response to abuse of the system, Malaysia blocks immigration from Bangladesh

  • The Bangladeshi and Malaysian governments enter talks, and the cycle repeats

In general across the world, demand to immigrate is wildly higher than the supply for immigration slots allowed. Over a billion people worldwide would like to move internationally for work. Any American who has ever taken a taxi in Kenya can attest to this: You are always being asked "Can you help me get to America?"

Governments in destination countries do not always want to promote in-migration. But my takeaway here is that even when governments want to encourage migration, they don’t properly account for how much demand there is.

The willingness of migrants to pay 5x sticker price to migrate shows that migrants value the opportunity to move at a value far greater than the government thinks is fair to charge (1). Regardless of whether you think that the costs to migration should be determined by market forces or not, the fact that migrants are WILLING to pay so much shows how much people value the opportunity to move.

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1. By the way, the International Organization for Migration says that labor migrants should not be charged any recruitment fees or related costs. There seems to me to be an oversensitivity here - an equation of “charging money” with “exploitation”.

Luigi Achilli provides evidence that even in the case of illegal migration, we should not equate “charging a high price for an illegal service” with “exploitation”. In general, if someone understands the risks of a service and is willing to pay the price, then there is something more interesting going on than simple exploitation.