Kuala Lumpur: From a mining town to an international remittance hub

In Malay, the word kuala refers to the point where rivers join. It’s a fitting name for Kuala Lumpur, which, in the space of 165 years, has gone from a small town supporting tin mines to a 7.8 million-inhabitant megacity where Indian, Chinese and South-East Asian influences flow together.

Locals often refer to Kuala Lumpur as a ‘big melting pot’ due to its diversity in language, religion, and food. However, the Malaysian capital also has a hard-earned reputation for business and an entrepreneurial spirit.

Read on to learn the secret of Kuala Lumpur’s rise and how the city contributes to Malaysia and the Asia-Pacific region today.

Merantau and Kuala Lumpur’s rise

The verb merantau means, ‘to leave your home area to make a living’; a concept that has shaped the archipelago’s growth for centuries. Merantau migration has historically been an essential part of regional power where local rulers would compete by accumulating manpower. From the very beginning, Kuala Lumpur sought migrants to fuel its development.

On the surface, a small mining town prone to fire damage and storms may not appear to offer the ideal conditions for a booming megacity, but these characteristics eventually brought opportunities for growth. In 1881, local authorities prohibited the use of wood and thatch in construction, resulting in a brick construction boom. Seizing the opportunity, Chinese entrepreneurs bought real estate to set up brickworks and later funded the construction of railways connecting the town with the Ampang tin mines. Labour for lucrative projects like these came from China with skilled plate layers coming from India.

The sale of tin transformed Kuala Lumpur into a prosperous region, but it was widely known that the metal was a finite resource that would eventually run out. Fortunately, the need for additional labour surfaced again in the early 20th century as the development of the rubber industry in Kuala Lumpur coincided with the invention of the automobile, which greatly increased the global demand for rubber. This brought not only migrants, but also companies and wealth from abroad. Kuala Lumpur’s population more than doubled with migrants coming predominantly from India and China, just as they had during the heydays of tin mining.

While these economic booms brought considerable prosperity to Kuala Lumpur, they also meant that the province was very vulnerable to fluctuations in the prices of the products and materials it exported. In the period immediately after Malaysia gained its independence, the city and country sought to diversify from producing raw materials and planted the seeds of what would become thriving manufacturing and construction sectors.

Modern Kuala Lumpur

When you say ‘Kuala Lumpur’, many automatically think of the iconic Petronas Twin Towers in the city center. This landmark, like the Kuala Lumpur International Airport and Putrajaya federal government district, was built by migrant workers. The early 1990s construction boom saw migrants come from all over Asia, and today, foreign workers make up 15% of the Malaysian workforce.

It is hardly surprising that Kuala Lumpur is such a popular destination for migrants. Prior to Covid-19, the city’s economy was growing at an annual rate of between 6 and 7%, providing ample employment opportunities for migrants across multiple sectors.

It is precisely these opportunities that have fostered a booming migrant culture in neighborhoods like ‘Kota Raya’. Here, Filipino hairdressers are a mere stone’s throw from Bollywood DVD stores and Nepalese restaurants. This community is helping to rapidly expand Malaysia’s services industry, which grew by a staggering 9.1% in the final quarter of 2022. With people from all over Asia working in the city, there’s plenty of demand for home comforts such as familiar food, clothes, and music.

International Remittance Hub

The growth of these communities has transformed Kuala Lumpur into an international remittance hub, with remittance flows reaching families right across the Asia-Pacific region. Between 2003 and 2018, money transfers from Malaysia tripled, with a considerable amount of that increase coming from the Kuala Lumpur-Selangor province.

Importantly, these outflows are also heading to neighboring countries that rely heavily on remittances. Remittance patterns show that these migrants play a huge role in the economies of several Asian states such as Nepal, where remittances account for nearly a quarter of GDP, as well as the Philippines, where they make up nearly 10%.

For the families of many migrants, remittances sent from Malaysia have both immediate and long-term benefits. The International Fund for Agricultural Development found that in the Asia-Pacific region, 70% of international remittances were used by families for essentials and the remaining 30% go towards future investments like education.

But not all migrant stories can be told using statistics. To uncover the hopes and aspirations of international migrants in Kuala Lumpur, Ria decided to meet some customers in the heart of the city. Many have had multiple jobs; some possess their own entrepreneurial ambitions but all of them have an inspiring story to tell. You can listen to their stories in our series, The World We Share.

For more info: comms@riamoneytransfer.com