Baseline Study of Business and Human Rights in ASEAN: Malaysia

This baseline study looks specifically at the State Duty to Protect in the UN “Protect, Respect, and Remedy” Framework (UN Framework).

What government bodies have the responsibility to prevent, investigate, punish and redress business-related human rights abuses?

There are no specific government body that is tasked with this responsibility. However, there are a number of government agencies, which are tasked to look at issues, which could be associated with business-related human rights abuses, such as anti-corruption, labour rights, and environmental rights. Most of these government agencies are entrusted with the task of developing regulations, non-binding codes and guidelines to ensure the respect of laws and policies. Also, some of these agencies regulate through the issuance of licences and consideration of Environmental Impact Assessments (EIA) and some are given the power to investigate breaches of laws and regulations.

To what extent do business enterprises face liability for breaches of laws by business enterprises?

Malaysian law is adequate in terms of holding business enterprises legally accountable as legal persons. Case law and the Companies Act 1965 recognise business enterprises as having separate legal personality. Equally, the Penal Code includes any company or association or body of person

whether incorporated or not, within the definition of “person”; as such, companies can be held criminally liable, save for personal natured crimes such as rape.

Do laws and/or regulations require business enterprises and individuals to avoid causing or contributing to adverse human rights impacts through their activities, or to prevent or mitigate adverse human rights impacts directly linked to their operations, products or services?

Laws in Malaysia do not specifically require business enterprises to avoid causing or contributing to adverse human rights impacts through their activities. Nevertheless, the laws instil avoidance and regulate the actions of individuals, companies and businesses through the creation of offences, although enforcement in some areas remain weak. The main laws and key human rights concerns concerning business enterprises include:

• Labour rights – The poor treatment of foreign workers, particularly foreign domestic servants are issues of concern in Malaysia. There have been complaints of mistreatment, exploitation by unscrupulous recruitment agencies, physically abuse and poor living and work conditions of foreign workers;
• Sustainable development and rights of indigenous peoples – Environmental protection is perhaps one of the more well-regulated industries in Malaysia. A number of laws and regulations exist to prevent water, air and land pollution. However, implementation appears to be weak and indiscriminate and awareness of environmental legislation may not be adequately widespread. Concerns have been raised, particularly the lack of proper consultation with those affected and violation of native customary rights and rights of indigenous people, including destruction crops and cultural heritage, such as  graves and historical sites;
• Human trafficking – Majority of trafficking victims in Malaysia are among the two million documented and 1.9 million undocumented foreign workers in Malaysia. Some of them who migrated willingly are forced into labour or debt bondage or sexually exploited. The Anti-Trafficking in Persons Act 2001 has put in place a legal framework to tackle this problem. However, investigation and prosecution of labour trafficking cases remain slow and concerns have been raised that victims of trafficking and not traffickers or pimps are being arrested, charged detained and deported;

Is the State using corporate governance measures to require or encourage respect for human rights?

In the area of corporate governance and corporate social responsibility, the government of Malaysia consolidated much of its corporate social responsibility activities in 2007, with the adoption of the CSR Framework/ Blueprint by the Securities Commission and the Bursa Malaysia and the Silver Book (in 2006) and the imposition of a mandatory requirement (for all publicly listed companies) to report corporate social responsibility activities. The Securities Commission promulgated the Malaysian Code for Corporate Governance 2012 and the Bursa Corporate Governance Guide. The aforementioned documents are non-binding and apply only to Government Linked Companies (GLCs) (the Silver Book) and publicly listed companies, respectively. They contain broad principles of corporate governance and social benefit, principles to be adhered to by directors such as the importance of knowledge of potentially unethical and legal issues that could adversely affect the company, and encouragement to formulate a code of ethics. For example, the Bursa Corporate Governance Guide encourages directors to consider producing sustainability reports that address community involvement, equal opportunity, workforce diversity, human rights, supplier relations, child labour, freedom of association and fair trade. It must be pointed out that there is no meaningful rights language used to encourage directors or businesses to take into account their human rights impact.

It is encouraging that a number of publicly listed companies have published Sustainability Reports to complement its Annual Reports. A cursory examination of the Sustainability Reports and Annual Reports of listed companies show that the most promising area in terms of business and human rights is reports of efforts undertaken to promote environmental sustainability. Apart from this, most activities reported tend to be philanthropic in nature, with no mention of human rights. This probably stems from the lack of guidance as to the content required in this section and also the absence of an explicit link between human rights and corporate social responsibility in the codes and guidance.

Is the State taking steps to support business respect for human rights in conflict-affected and high-risk areas?

Malaysian business enterprises have expanded their businesses to conflict-affected areas such as Iraq, Sudan, South Sudan, Myanmar and the Democratic Republic of Congo (DRC). There is no known official information that the government identifies, prevents or mitigates human rights-related risks. It appears that if there are any standards regarding business and human rights that are adhered to by Malaysian companies operating in these areas, they are non-binding and self-imposed.

What are the efforts that are being made by non-State actors to foster State engagement with the Framework and the Guiding Principles?

The Human Rights Commission of Malaysia (SUHAKAM) has been more reactive to and vocal on the Framework and Guiding Principles. SUHAKAM has participated in a number of workshops and also organised roundtable discussions on human rights and business. The Human Rights Commission of

Malaysia Act 1999 confers upon SUHAKAM the power to look into the area of business and human rights and to investigate business-related human rights abuses. Other non-State actors have not directly reacted to the Framework and the Guiding Principles save for one a multi-national corporation, which pledged support for the Framework. UN agencies in Malaysia, particularly UNICEF works with the Companies Commission of Malaysia to develop best business circulars on childcare establishment and nursing others in the workplace.

The full baseline study can be obtained here.