Malaysia Tightens Work Permit Rules for Foreign Workers

Malaysia Tightens Work Permit Rules for Foreign Workers

Kuala Lumpur, Malaysia – Until recently, Sanjeet, a business consultant from India, viewed Malaysia as his home. After over ten years of residence and work in the region, he had acclimatized to its climate, culture, and lifestyle.

"Once I had crossed the five-year mark, Malaysia seemed like an ideal long-term choice,” Sanjeet, who is in his 40s and has requested anonymity, shared with Al Jazeera. “One gets accustomed to what Malaysia has to offer."

However, the Malaysian government’s recent initiative to diminish the nation’s dependence on foreign labor has raised uncertainties for him and many others in similar circumstances.

Effective June, the government revealed plans to increase the minimum salary requirements for foreign workers by as much as double, while also instituting limits on their durations of stay to five or ten years.

“What was surprising was that this came out of the blue,” Sanjeet remarked. “It certainly leaves room for doubt regarding long-term plans, which include significant investments like purchasing a house or a car here.”

Since gaining independence from Britain in the 1960s, Malaysia has evolved into one of Southeast Asia’s most burgeoning economies, making it a sought-after destination for foreign labor. Currently, approximately 2.1 million documented foreign workers contribute to its workforce, many engaged in manual labor earning about 1,700 ringgit ($430) monthly.

A smaller subset of these workers operate within higher-paying specialized sectors, including finance, semiconductors, and oil and gas. As reported by Home Affairs Minister Saifuddin Nasution in 2024, the expatriate community—estimated to number around 140,000—plays a crucial role in the economy, injecting roughly 75 billion ringgit ($19 billion) annually and generating approximately 100 million ringgit ($25 million) in tax revenues.

The government’s recent policy revisions have ignited discussions regarding the function of foreign labor in a nation with a population of 34 million. In the 2025 five-year national policy overview, the government cautioned that “continuous reliance” on low-skilled foreign workers has stymied technological advancement within the economy, resulting in challenges such as wage discrepancies and sluggish productivity growth.

In an effort to promote local staffing and enhance income levels in a country where the average monthly wage hovers around $700, the government aims to diminish the share of foreign workers in the labor force from 14.1 percent in 2024 to just 5 percent by 2035.

The Ministry of Home Affairs has indicated that stricter criteria for foreign workers will extend to higher-income expatriates as part of an initiative to foster sustainable economic growth and the cultivation of local talent.

Under the forthcoming regulations, minimum monthly salaries for various work permit categories will be significantly increased. For instance, salaries in one category will escalate from 10,000 to 20,000 ringgit ($2,500 to $5,000), while others will see increases from 5,000 to 10,000 ringgit ($1,260 to $2,520) and from 3,000 to 5,000 ringgit ($760 to $1,260).

In addition to the heightened salary benchmarks, the duration of expatriates’ stays will be curtailed, and employers will be required to formulate plans for transitioning local talent to fill positions once work permits conclude.

UK national Thomas Mead, who has been residing in Malaysia since late 2022, expressed apprehensions regarding the new regulations, noting that many expatriates are beginning to explore relocation alternatives. “I've overheard some expatriates discussing their options for moving if the policy remains in effect,” he stated, revealing a reluctance to depart from a country he has come to appreciate.

Douglas Gan, a venture capital founder with interests in Malaysia, voiced concerns that these new regulations could increase operational expenses for firms attracted to the country’s historically lower costs. He emphasized that implementing 10,000-ringgit salary requirements might discourage companies from hiring engineers from economically disadvantaged regions in China.

While Gan recognized the necessity for more refined regulations governing foreign labor, he urged the government to consider the broader implications these adjustments may pose across various industries.