Business leaders caution that rigid expatriate policy changes could stifle investment in key sectors like AI and green energy by limiting access to critical global talent.
PETALING JAYA: Employers have said rigid implementation of Malaysia’s revised expatriate employment policy could undermine efforts to grow high-value industries, as businesses grapple with a shortage of specialised talent needed to sustain investment momentum.
Malaysian Employers Federation (MEF) president Datuk Dr Syed Hussain Syed Husman said Putrajaya must strike a careful balance between reducing reliance on foreign labour and ensuring companies retain access to critical expertise in emerging sectors.
“Malaysia must strike the right balance between developing local talent and attracting global expertise.
“Expatriates play a critical catalytic role in accelerating knowledge transfer, capability building and innovation within our workforce.”
MEF said the concern is particularly acute as Malaysia positions itself to attract investments in high-growth areas such as data centres, generative artificial intelligence, green energy, and environmental, social and governance compliance – sectors in which local capabilities are still evolving and highly experienced talent remains scarce.
It emphasised that the revised framework should not be treated solely as a labour control mechanism but also as part of a broader strategy to strengthen the domestic talent pipeline without eroding the country’s appeal to multinational investors.
“Knowledge transfer is not instantaneous. It requires time, structured engagement and continuous exposure.
“Therefore, tenure policies must be sufficiently flexible to allow meaningful transfer of skills and expertise to Malaysians.”
MEF also urged that succession planning requirements be applied in a practical, industry-sensitive manner, particularly for highly-specialised roles in which localisation may take longer to achieve.
It added that Malaysia’s attractiveness to global talent hinges not only on employment regulations, but also on efficient immigration processes, ease of doing business and overall living conditions.
“To capture emerging opportunities in high-growth sectors, Malaysia must position itself as both an investment and a talent hub.
“Attracting expatriates should be seen as a strategic enabler of local talent development and economic expansion,” Syed Hussain said.
On Jan 14, the Home Ministry announced that the revised expatriate employment policy will take effect on June 1, introducing higher salary thresholds across all Employment Pass categories as well as fixed employment periods.
Category I has been raised from RM10,000 to RM20,000 and above, Category II from RM5,000–RM9,999 to RM10,000–RM19,999, and Category III from RM3,000–RM4,999 to RM5,000–RM9,999, with a RM7,000–RM9,999 exception for the manufacturing and related services sector.