Malaysia Suddenly Postpones Foreign Worker Employment Regulations

Created to Employ Nationals... "System Overhaul Needed" Corporate Backlash
Implementation Scheduled for This Month Delayed to January Next Year

[Asia Economy Kuala Lumpur Hong Seong-ah, Guest Reporter] The Malaysian government has abruptly postponed the foreign employment regulations scheduled to take effect this month. Although the move is aimed at prioritizing the employment of local citizens, the implementation date has been delayed until next year amid growing dissatisfaction with the foreign employment regulation system.

According to local media such as The Edge Market on the 17th, the Malaysian Ministry of Human Resources has decided to improve the foreign employment regulations and implement them starting January 1 of next year. Datuk Seri Saravanan, Minister of Human Resources, stated, "Many companies requested that certain job categories such as Employment Visa Category 1 (monthly salary of approximately 3 million KRW or more), professional positions, and re-employment positions be excluded from the regulations," adding, "We decided to postpone the implementation date as we judged that an efficient system overhaul is necessary."

Malaysia's foreign employment regulations were established to encourage the employment of local citizens. Companies seeking to apply for new employment visas for foreign hires must conduct job recruitment activities for at least 30 days through the employment portal, and if they fail to hire locals despite these efforts, they can receive a certificate allowing them to apply for a foreign employment visa.

This policy was introduced in response to the sharp rise in unemployment among Malaysians due to the spread of the novel coronavirus disease (COVID-19) this year. According to the Malaysian Department of Statistics, the unemployment rate among Malaysians was 4.6% as of September, up 1.3 percentage points compared to the same period last year. Minister Saravanan encouraged local employment, saying, "The job market has frozen, but about 300,000 graduates will be seeking jobs this year," and "Malaysians have a high level of cultural understanding, which is advantageous when expanding business to other regions."

However, companies expressed that system maintenance should take priority before the regulations are enforced. An industry official said, "The current foreign employment regulation method is inefficient," and advocated maintaining the status quo. The official added, "To expedite hiring, a system is needed where companies can directly offer employment rather than just waiting for job seekers."

There were also calls to exclude dispatched workers and executive-level expatriates from the regulations, as these roles require special skills commensurate with their positions. The Federation of Malaysian Manufacturers (FMM) expressed dissatisfaction with the foreign employment regulations, stating, "Some expatriate roles are difficult to replace with locals."

Some voices have pointed out that regulating foreign workforce hiring could lead not only to a decrease in foreign direct investment (FDI) but also to global companies leaving the Malaysian market. In a situation where neighboring countries like Indonesia are easing regulations to attract FDI, strengthening regulations only in Malaysia could result in a loss of competitiveness.

This content was produced with the assistance of AI translation services.