KUALA LUMPUR, Malaysia—Momen Bhuiyan left Bangladesh and his job as a van driver two years ago, to make his fortune in Malaysia and set himself up for life. As for so many like him, it did not turn out that way.

"I was told I would get a better job and a higher salary here, so that when I went back to Bangladesh I could marry my girlfriend," said the 23-year-old with a boyish grin.

But since then he has struggled to find work even as a day laborer, and with the arrival of the global slowdown the situation for migrant workers—precarious even during boom times—has dramatically worsened.

Activists and diplomats say the downturn, which has shuttered factories and construction sites across the region, is making foreign workers even more vulnerable by threatening their livelihood, health, and human rights.

"They keep on telling me there is 'no job, no job' whenever I ask," said Momen of the agents who he paid more than $3,000, money raised by selling off his family's land and borrowing from relatives.

"But going back to Bangladesh now would be a problem for me. I already sold the land, I have a loan, I don't have money to pay them back, I don't have my passport," said Momen, who has had no work at all for months.

His story is a common one among the 2.2 million migrant workers in Malaysia, one of Asia's largest importers of labor which relies on foreigners to clean homes, care for children, and work in plantations and factories.

Over the years, the government has become concerned about the ramifications of having such a large migrant workforce and has periodically tried to cut back the numbers.

Facing mass layoffs and a looming recession as the global slowdown hits, it earlier this year banned the hiring of new foreigners in the manufacturing sector in a push to boost local employment.

It also drastically reduced the number of work permits for foreigners in other sectors and cancelled visas that had already been issued to 55,000 Bangladeshi workers.

Rights groups say that migrant workers are suffering the most from the gloomy economic times.

"Wrongful dismissal, unpaid wages, and late payment—all these are ongoing problems for the migrants even without the financial crisis," said Cynthia Gabriel from migrant labor group Caram Asia.

"It is just that the situation now makes it even more acute," she said.

The small shelter down a back alley where Momen is staying in the Malaysian capital Kuala Lumpur is now filled to bursting, its occupants increasing from 30 to 70 in the past few months as more jobless seek somewhere to sleep.

Caram Asia said the mass retrenchments are not only pushing more workers—and their families back home—into extreme poverty but also putting them at greater risk of infection from diseases like HIV/AIDS.

Migrant workers, deemed one of the populations most at risk of contracting the virus, will be deeply affected by cuts in funding for medical treatment and programs aimed at limiting infections and raising awareness, it said.

Tatang Razak, deputy chief of the Indonesian embassy in Malaysia, said the mission has received rising numbers of complaints over the past few months about layoffs and worsening living conditions.

"They don't have work here, yet they can't go home because the outsourcing companies want to keep them. If they want to go home, they have to pay penalties and buy their own air ticket, which they can't afford," he said.

The outsourcing companies, which work with recruiting agents in source countries, act as middlemen and earn lucrative commissions by bringing workers here.

But with no jobs available, agents are keen to cut costs and the living conditions for workers under their care go from bad to worse, says Tatang, adding that often 20 people stay in one small apartment.

"You can imagine the environment—very crowded, unhygienic, and sometimes men and women staying together. That's why most of the workers want to go home and some run away to be illegals, this creates these problems," he said.