Malaysia has been grappling withunderstanding how many foreign workers reside in the countryand thus faces challenges in formulating evidence-basedforeign worker policies. This paper investigates how to usemicro-level remittance transaction data collected from moneytransfer service providers to estimate the number of foreignworkers. Most foreign workers remit a large portion of theirearnings to support family members back home. They arelow-income earners, are sensitive to remittance costs, andthus opt for money transfer service providers to remit moneyrather than regular banks, where transfer services are moreexpensive. Therefore, the remittance data provide a usefulsource to conduct the investigation. Existing estimatesrange from two to five million foreign workers; our resultsnarrow that range considerably, estimating a total of 2.99million to 3.16 million foreign workers in Malaysia as of2017–18. State and nationality distributions of foreignworkers in our estimates are consistent with the Ministry ofHome Affairs data, lending support to the validity of ourestimates. Nevertheless, authors note that the Bank NegaraMalaysia remittance data could potentially underestimate thenumber of workers in states with low access to money serviceproviders, as well as nationalities that have access toalternative money transfer mechanisms such as commercialbanking and informal transfer channels.
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