Will the latest move send another negative message about Malaysia to foreign companies wishing to invest here?

During the last six months, since Malaysia placed strict control over its borders in response to the pandemic crisis, the government’s message to resident expats has been interpreted negatively by some expats, who have concluded they are no longer welcome here.

Resident expats with employment passes, as well as those with Malaysia My Second Home visas, were initially told they could not re-enter Malaysia following the March implementation of the Movement Control Order, despite being legal residents in the country. Many, of course, could not understand why they were treated that way. Even when some were allowed to come back to Malaysia, the procedures were often quite complicated and did not seem to be linked to preventing the spread of the coronavirus.

Now, the Ministry of Human Resources has set up new procedures which will make it harder for expats to apply for employment passes or renew existing passes. This is purportedly because of concerns about local unemployment and the fact there was a 12% increase in the number of expatriate workers in Malaysia last year. Apparently, there are now over 122,000 expats with employment passes; there was also a significant increase in applications from India, as well as from China and Japan. The Minister mentioned that some companies had been classifying unqualified foreign staff as expatriate workers, which suggests it was somehow easier to get them employment passes. He did not offer further clarification as to why or how these applicants had been approved by Malaysian authorities if they were deemed unqualified.

Based on feedback given to us from many businesses owned or managed by expats, it has been harder to get an employment pass for some time now. Even when a pass application was approved, oftentimes it was only for one year, whereas previously employment passes were issued for two or more years. With this in mind, along with our own experience navigating the demanding process for getting an expat’s employment pass approved, it is hard to understand how the substantial increase in numbers came about.

The new procedures, which went into effect on November 1st, require that the position be advertised on the national jobs website, MYFutureJobs, before the application will be processed. Local applicants must be interviewed by both the company and representatives of the Social Security Organisation (SOCSO) to see if they are qualified to fill the position before an expat can be considered.

While it is understandable that priority should go to Malaysians for most jobs in the country, this seems to be the case already. Expatriates must be skilled, degreed, and qualified to get their pass approved, and minimum salary thresholds have been set by the Malaysian government. The process is already rather demanding, and a substantial amount of documentation is required from both the hiring company and the expat seeking the work permit. Given the cumbersome process, plentiful education and experience requirements, and the minimum salary threshold for an expatriate employment pass, it seems unlikely that many companies would choose to hire an expat if they could hire a qualified Malaysian instead.

If some companies are misusing the process to get approval for unqualified staff, then this would seem to be an internal issue which would be better handled on a case-by-case basis. It would seem that somewhere, something is amiss if it there are really such widespread abuses under the current procedures.

There are concerns that the tightened procedures are already impacting foreign direct investment, as word has been spreading for quite some time now that Malaysia is making it harder to get work permits, even for qualified expatriates. Several years ago, the government was trying to persuade talented foreigners to stay in Malaysia and so the 10-year Resident Pass was introduced, but that aim has clearly changed in recent years. The current steps look like a further clampdown, which may send yet another negative message about investing here.

Many major multinationals like to know that there will be no major hurdles to getting work permits for their staff when they need them before they invest in a country, and we worry that the new regulations will just make Malaysia that much more unattractive at a time when they need foreign investment that will not only bring much-needed revenue into the country, but also create more jobs for Malaysians.