Malaysia’s decision to double minimum salary thresholds for expatriate professionals has drawn criticism at home and attracted international attention, as businesses, foreign workers, and labour groups question whether the policy will strengthen local talent or narrow the country’s regional competitiveness.
Malaysia’s plan to substantially raise minimum salary thresholds for expatriate professionals has triggered unease among foreign workers, concern among employers, and debate among policymakers, while also drawing coverage from major international media outlets across Asia, Europe, and beyond. Framed as a move to open more white-collar opportunities for Malaysians, the policy has instead exposed tensions between labour localization goals and the realities of a globally connected economy.
From June, employers seeking to hire or retain expatriates under the Employment Pass (EP) scheme will face significantly higher salary requirements. Senior management roles (Category I) held by non-citizens must now command a minimum monthly salary of RM20,000, up from RM10,000. Skilled professional roles (Category II) will be subject to a new threshold of RM10,000 per month, once again doubling the previous benchmark.
The Ministry of Home Affairs has positioned the move as part of a broader strategy to reduce reliance on foreign labour, improve wage prospects for Malaysians, and ensure that expatriate hiring contributes to long-term skills development rather than permanent substitution. For certain roles, employers will also be required to demonstrate plans to transition positions held by expatriates to Malaysians over time.
While discussions around tightening expat hiring rules have been ongoing since last year, the scale and speed of the changes have taken many businesses and foreign workers by surprise. The policy announcement has since been reported by international outlets, placing Malaysia’s labour reforms under a regional and global spotlight.
SHIFTING THE EXPATRIATE LANDSCAPE
For expatriates already based in Malaysia, the announcement has landed abruptly. Some foreign professionals have described the new thresholds as impractical, particularly in sectors that rely on specialized skills but operate on tight margins.
A long-term French expatriate working in tourism described the policy as “ridiculous”, noting that while his sector may not be the direct focus of the new rules, seasonal industries would feel the impact quickly. He cited already-existing hurdles in permit renewals and warned that the new salary floor could make it unviable for companies to retain experienced foreign staff.
“Malaysia makes it so difficult as it is … it is hard to get permits renewed because of the difficult bureaucracy that requires a lot of paperwork,” he said to This Week in Asia. “This is really demotivating and quite upsetting because I have been here since 2015 and now I will be asked to leave after 10 years.”
Such concerns have resonated beyond Malaysia’s borders. International reporting has highlighted fears that the policy could prompt an outflow of mid-career professionals and discourage future expatriates – and foreign companies – from considering Malaysia as a regional base.
In comparative terms, Malaysia’s revised thresholds place it among the stricter expatriate hiring regimes in Southeast Asia. Singapore has tightened its Employment Pass system through a points-based framework that weighs salary, qualifications, and workforce diversity. Thailand applies lower tiered salary thresholds and offers exemptions for selected high-growth industries, while Vietnam focuses more on skills-based permits with flexible durations.
Malaysia’s approach, by contrast, relies heavily on salary as a gatekeeping mechanism, with fewer explicit carve-outs for niche or emerging sectors.
ECONOMIC NEEDS AND POLICY TENSIONS
According to official figures, the Immigration Department issued 180,812 expatriate passes last year, including both new applications and renewals. These passes cover roles that often demand advanced qualifications, professional certifications, or specialized expertise, such as engineers, doctors, IT specialists, managers, and technical professionals.
At the same time, Malaysia’s labour market continues to expand. More than 2.28 million skilled jobs require degree-level education or equivalent credentials, roles that are frequently filled by foreign professionals due to shortages in local supply or experience gaps.
The new expatriate salary thresholds are distinct from policies governing migrant workers in lower-wage sectors such as construction, agriculture, and food services, where official monthly wages can be as low as RM1,700. That contrast has fuelled debate over whether salary hikes alone can address structural issues in workforce development.
Prime Minister Anwar Ibrahim has repeatedly stressed the need to reduce dependence on foreign labour, particularly as automation and artificial intelligence reshape employment patterns. In July last year, he said Malaysia aims to cut its foreign workforce share by 5% by 2030, from roughly 15% currently.
Some Malaysian professionals, however, remain sceptical that higher expatriate salary thresholds will automatically translate into better opportunities for locals. An IT specialist interviewed by regional media questioned whether proposed long-term transition plans are even realistic in fast-changing industries, arguing that skills cycles often move faster than policy timelines, particularly with the advent and growth of artificial intelligence, which has the potential to dramatically reshape the job market landscape over the next decade.
For employers, the financial implications are immediate. A creative industry professional based in Ampang said the revised salary levels could push companies to rethink staffing models altogether, as hiring one expatriate could soon cost the equivalent of employing several local workers. While that outcome aligns with government objectives, it also raises questions about whether local talent pipelines can fill specialized roles quickly enough.
Business groups have adopted a more cautious tone. The Malaysian Employers Federation has expressed broad general support for strengthening local talent and reducing overreliance on foreign workers, but warned that rigid implementation could undermine Malaysia’s ability to attract investment.
Its president, Syed Hussain Syed Husman, said expatriates often play an important catalytic role in building advanced operations, transferring technology, and accelerating structured skills development for Malaysian professionals.
“Expatriates continue to play a critical and catalytic role by establishing and scaling advanced operations, transferring technology, leadership skills and accelerating structured skills and knowledge to Malaysian professionals,” MEF president Syed Hussain Syed Husman said.
Without sensible and competitive policies to lure expats, Malaysia could scare off some foreign investment altogether, he warned.
For many expatriates, the six-month lead-in before the policy takes effect offers little reassurance. A Filipino business processing technician working in Malaysia since 2022 said the higher salary requirement makes it uncertain as to whether or not his company will renew his employment pass, as cost considerations may outweigh benefits.
Another long-term expat noted that there seems to be little actual analysis or thoughtfulness going into the new salary requirement, merely that they were all simply doubled.
As international attention grows, Malaysia’s expatriate salary reset might be seen as a test case for how emerging economies balance domestic workforce priorities with global talent flows. Whether the policy strengthens local employment or erodes the country’s appeal as a regional hub will become clearer only after its full implementation. As Malaysia’s government has now said, following a bit of backlash, that it will “engage with relevant stakeholders” – something critics argue should have been done before making the announcement – it may well be that the actual changes, when they take effect, will be different from what has been shared so far.
