## **Step 3. Tabulate summary statistics of individuals and dummy variables by nationality and state.**

The share and number of foreign workers are computed by main nationality and state, and by month from March 2017 through February 2018. We also take an annual average distribution.

## **Step 4. Make adjustments to the remittance statistics and compare the results obtained from remittance data analysis with the official numbers reported by MOHA** .

Based on the remittance analysis, we make additional adjustments to estimate the total number of foreign workers in Malaysia. As earlier in World Bank (2020), we recognize that not all foreign workers use MSPs to remit their earnings back home, and thus assume that the remittance data represent 77 percent of the foreign worker population, based on the World Bank Greenback 2.0 surveys of foreign workers in Johor, which finds that about 77 percent of foreign workers use MSPs to transfer money (World Bank, 2017). Then, the final estimated foreign worker population is compared with MOHA’s figures on work permit holders, using annual averages, to find the estimated number of irregular workers between March 2017 and February 2018.

## **Step 5. Robustness check to provide a lower-bound estimate of the number of foreign workers.**

As a robustness check of our initial estimations, we took the share of foreign workers by nationality in each state from the MOHA data, and then applied these shares to the total number of foreign workers at the state level we obtained from the remittance data (the figure prior to adjusting using the 77 percent remitter proportion in Step 4). After recalibrating the monthly numbers of foreign worker population by nationality, we calculated the differences in the number of foreign workers in each state between our results and the MOHA data. When the differences are negative (that is, the number of foreign workers in the remittance data set is smaller than in the MOHA data), we apply that the differences are zero. In other words, the number of foreign workers for a specific nationality in a given state from the remittance data set equals that from the MOHA data set. This is to correct that this method does not adjust for the 77 percent of the foreign worker population who use MSP channels to send money. As noted earlier, not all foreign workers have access to MSPs or they may use of alternative channels for various reasons. We add the nationality-specific differences to the MOHA data to estimate the size of the potential foreign worker population in Malaysia. This method could generate an upward bias, but cases where the differences are negative are few and the negative differences are small. Therefore, it is more likely to underestimate by not fully adjusting those ‘missing’ foreign workers (who do not use MSPs) in nationality groups where differences are positive.

# **4. Results**

**Our estimates suggest that the total foreign worker population was between 2.99 million and 3.16 million** during the period of March 2017 to February 2018, a narrower range than our earlier estimates in World Bank (2020). Firstly, we identified 2.43 million individuals who are potentially foreign workers in the remittance analysis and then adjusted the estimate on the assumption that the remittance data represent 77 percent of the foreign worker population (as explained earlier in Step 4), thus leading to 3.16

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