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Why is it called the sponsorship system?

It is called a "sponsorship system" because employers are required to sponsor the visas, flight costs, and other expenses of bringing workers into the country. This effectively gives employers the power to determine the legal status of a worker. For the employer, it ensures that workers do not leave before the end of their contracted term of employment.

Many countries, such as Malaysia, Japan, Korea, or Singapore, are implementing strict rules regarding the admission, rights, and entitlements of migrant workers who enter the countries depending on their skills, qualifications, and sector of work. In general, foreign workers are only allowed to work for the employer and in the occupation indicated in their work permit. The termination of employment of a foreign-born worker results in the immediate termination of the work permit, in which case the migrant worker must leave the destination country.