'The Malaysia-Indonesia Remittance Corridor' finds that Indonesian migrants to Malaysia are showing an increasingly clear preference for informal transfer mechanisms compared to their counterparts in other countries. A little less than half of all Indonesian migrants overseasthought to be around 2 millionare working in Malaysia. An increasing number of migrants are women, and the corridor is also marked by a high number of undocumented migrants. Only about 10 percent of the estimated flow of remittances into Indonesia from Malaysia is transferred through the formal system. The extent of this preference for the informal sector is unique to this remittance corridor. Indonesian migrants in other countries are using the formal sector far more than the migrants in Malaysia. In addition, Indonesian women and undocumented migrants in Malaysia especially find formal sector transfers either hard to access or inappropriate for their needs.
This report gives an overview of the Malaysia–Indonesia remittance corridor and suggests policy avenues for improving access to formal remittance transfer channels; increasing the transparency of the flows and the cost structure; and facilitating remittance transfers, particularly for undocumented and female migrant workers.