Finding Work in Malaysia Becomes Harder, Expats Start to Worry

The Malaysian government has unexpectedly planned to cut the number of foreign workers in the country to encourage the recruitment of local labour and increase domestic income. This move has triggered deep concerns among expatriates who have long settled there, including Sanjeet, an Indian business consultant who has considered Malaysia his home for more than a decade.

After living and working in the Southeast Asian nation for over ten years, Sanjeet felt comfortable with the climate, society, and lifestyle there. However, the government’s latest plan to reduce reliance on foreign labour has made his future and that of thousands of others uncertain.

“Once I crossed the five-year mark, Malaysia seemed like an ideal long-term choice. One gets used to what Malaysia offers,” Sanjeet told Al Jazeera on Thursday (26/03/2026).

Starting in June, the minimum salary threshold for foreign workers to obtain visas will be doubled, and employers will be restricted in the duration they can sponsor the same visa holder. This sudden policy has left many expatriates feeling uncertain about further investments in Malaysia.

“What is surprising is that this came out of the blue. It leaves room for doubt regarding long-term plans, which include things like buying a house or a car here,” said Sanjeet.

Malaysia has been an attractive destination for foreign workers for decades since gaining independence from Britain in the 1960s. Currently, there are about 2.1 million documented foreign workers, most of whom work in manual sectors with salaries around the minimum monthly wage of 1,700 ringgit (Rp 7,194,400), while a small portion work in high-salary specialist sectors.

In 2024, Home Minister Saifuddin Nasution stated that the population of high-income expatriates, estimated at 140,000 people, contributes around 75 billion ringgit (Rp 317.4 trillion) to the domestic economy. Additionally, they contribute about 100 million ringgit (Rp 423.2 billion) in taxes annually.

In the latest five-year national policy strategy released in 2025, the government warned that sustained dependence on low-skilled foreign workers has hindered the adoption of important technologies. This is seen as creating negative ripple effects on the labour market and national productivity.

“This issue triggers ripple effects in the labour market, including the dominance of low-skilled and low-wage jobs, wage distortions, and slow productivity growth,” wrote the authors of the 13th Malaysia Plan.

As part of efforts to increase incomes in a country with an average monthly salary of around 700 US dollars, the government plans to cut the proportion of foreigners in the workforce from 14.1 percent in 2024 to just 5 percent by 2035. The Home Ministry in January reaffirmed that these strict requirements will also extend to high-income expatriates to strengthen local talent.

Under the new rules, the minimum starting salary for three categories of work permits will be raised respectively from 10,000 to 20,000 ringgit (Rp 42.32 million to Rp 84.64 million), 5,000 to 10,000 ringgit (Rp 21.16 million to Rp 42.32 million), and 3,000 to 5,000 ringgit (Rp 12.7 million to Rp 21.16 million). Additionally, companies may only sponsor foreign workers for five to ten years.

Thomas Mead, a British wealth manager who has worked in Malaysia since late 2022, admitted to being shocked by the salary jump. He had just bought property in Kuala Lumpur with the intention of settling there permanently.

“There are always rules in place, including minimum salary requirements. However, the jump from 10,000 ringgit to 20,000 ringgit is quite a big surprise. I’ve heard some expatriates starting to talk about relocation options if forced, though many are reluctant to leave,” Mead said on Thursday.

Douglas Gan, a Singaporean venture capital founder, believes this change will raise operational costs for companies previously attracted to Malaysia’s cost efficiency. He opines that the new rules will be very challenging for recruiting technical talent like engineers from second-tier cities in China.

“If salaries rise to 10,000 ringgit, companies certainly won’t bring them here. For businesses already in Malaysia, we’re taking a wait-and-see approach,” said Gan.

Similar complaints come from Leonardo, an Indonesian citizen working in the computer gaming sector in Malaysia. The rule change will downgrade his category from second to third level, threatening his plans to bring his mother from Indonesia.

“My mother is alone and lives in Indonesia. There was a thought that if I could settle here, I could bring her over,” said Leonardo.

Economist from Kenanga Investment Bank, Wan Suhaimie, warns that the success of this policy greatly depends on the availability of local workforce skills. According to him, the salary threshold surge is surprising because many second-tier foreign workers are actually core managers and specialist engineers.

“The long-term benefits depend less on blocking expatriates and more on whether Malaysia can truly supply those skills. Tenure limits can succeed for skills transfer, but only if the succession plan is real and not just on paper,” explained Suhaimie.

CEO of FSG Advisory, Anthony Dass, added that the new policy will certainly increase costs for companies reliant on mid-tier expatriate labour. The implementation of this policy…