Malaysia Raises Bar for Foreign Worker Salaries

Malaysia is moving to curb its dependence on overseas labor by tightening visa conditions for both lower-wage migrant workers and higher-paid expatriates.

The government’s updated framework raises minimum pay requirements for foreign work passes and introduces limits on how long foreign employees can remain in the country, with the changes scheduled to take effect in June 2026.

What is changing in June 2026

Under the new rules, minimum monthly salary thresholds for three categories of foreign work permits will rise sharply, in some cases doubling.

One example cited is a jump from 10,000 ringgit to 20,000 ringgit per month for a permit category, equivalent to about $2,500 to $5,000.

Limits on stay and new employer obligations

Malaysia will also cap the duration foreign workers can remain in the country, setting maximum stays of either five years or 10 years depending on the permit type.

Employers will be required to prepare plans aimed at building local recruitment pipelines, signaling a shift toward structured domestic talent development rather than open-ended reliance on imported labor.

Targets and policy rationale

The policy is tied to a longer-term goal: reducing the foreign workforce share from 14.1% in 2024 to 5% by 2035.

The direction aligns with concerns set out in the 13th Malaysia Plan (2025), which warned that persistent dependence on low-skilled foreign labor has slowed technology adoption and contributed to wage distortions.

Economic stakes for business and investors

Foreign workers remain a meaningful part of Malaysia’s economy, including an estimated 140,000 expatriates.

Expatriates are estimated to contribute 75 billion ringgit annually, or about $19 billion, underscoring why the new thresholds and time limits could affect corporate staffing models and cost structures.

What it means now, and what remains unclear

By raising salary floors and limiting tenure, the government is signaling that future growth should rely more on local hiring and higher domestic wages, rather than large inflows of foreign labor.

Key implementation details are not specified in the available information, including how strictly the caps will be enforced across sectors, whether exemptions will exist, and how compliance with local hiring plans will be assessed.

For global companies operating in Malaysia, the changes may require earlier workforce planning ahead of June 2026, particularly for roles that have historically been filled through international recruitment.