New rules in Malaysia aim to reduce reliance on foreign labor by increasing salary requirements and limiting stays, potentially affecting thousands of expats.
Malaysia’s government announced plans to tighten regulations for foreign workers, aiming to reduce their numbers and encourage local employment. From June, the minimum salary for expat visas will increase significantly across categories, with the lowest tier rising from 3,000 ringgit to 5,000 ringgit monthly.
Under the new policy, foreign workers' stays will be capped at five or 10 years, and employers must develop plans to replace them with local talent. This move is part of a broader strategy outlined in the 13th Malaysia Plan, which seeks to cut the foreign workforce proportion from 14.1 percent in 2024 to 5 percent by 2035.
Impact on Expatriates
Expats like Sanjeet, an Indian business consultant in Malaysia for over a decade, expressed uncertainty about their future. He noted that the sudden changes disrupt long-term plans, such as buying property, after the policy was announced without prior warning.
Thomas Mead, a UK wealth manager who moved to Malaysia in 2022, described the salary hike from 10,000 to 20,000 ringgit as a shock. He and others are considering relocation options, though reluctant to leave due to their attachment to the country.
Douglas Gan, a Singaporean venture capital founder with operations in Malaysia, warned that the rules will increase costs for companies hiring overseas talent, potentially deterring firms from bringing in engineers from places like China. Leonardo, an Indonesian in the computer games sector, said the changes will downgrade his work category, complicating his plans to settle permanently.
Economic experts like Wan Suhaimie from Kenanga Investment Bank emphasized that firms can only hire locals if skilled workers are available, highlighting potential challenges in implementation. The policy builds on concerns that reliance on foreign labor has slowed productivity and wage growth in Malaysia.
