If you want to work in Malaysia, it is important to know the labor market and the conditions related to employment in this country. Immigration regulations are strictly controlled, and the authorities are very selective as to who is allowed to work in the country.
Most Malaysians are well educated and fluent in several local languages, so priority is given to Malaysian nationals wherever possible. In addition, securing employment for the local population has been one of the main priorities of the Government of Malaysia for several years. Accordingly, local, and international companies must provide basic justification for the employment of foreigners in Malaysia and obtain the necessary clearance from the Immigration Bureau.
However, don't be discouraged, because Malaysia abounds with opportunities, mainly in certain economic sectors which are experiencing extremely rapid growth, and where there are many applicants for talent from outside the country. This means that foreign high skills have a valuable role to play in the Malaysian job market.
Getting a work permit
On the basis of their contribution to cultural and intellectual diversity, foreign workers can be a real asset to a Malaysian company. An expatriate's experience and qualifications can be valuable, especially if the company is involved in the international market, and many multinational companies are very open to employing expatriates. High-ranking management or medical specialist positions are major sources of foreign employment in Malaysia.
It is very important to note that a residence visa in Malaysia does not allow you to work or be employed there. For this, you must hold an official work permit. These come in several types, depending on your qualifications, the length of your professional stay, your country of origin, and other conditions. To obtain the right to hire an expatriate, Malaysian companies must go through several administrative steps. Note that it is the responsibility of the employer to apply for a work permit in Malaysia on behalf of the expatriate employee.
Malaysian companies wishing to employ foreign workers must therefore comply with specific conditions. First, they must register with the Expatriate Services Department (ESD). The waiting period to receive a response is 14 working days. If the company's application is accepted, it can start the procedure to obtain permission from the Expatriate Committee or the relevant authority to employ a foreigner, which also requires obtaining a letter of recommendation from the agency that regulates the said sector. The company can then apply for a work permit.
Expats are not allowed to apply themselves and must meet certain conditions to qualify. They must either receive an offer for a senior managerial position in a foreign company operating in Malaysia, or an executive position that requires qualifications and experience, or be highly qualified with essential technical knowledge. Expatriates meeting these conditions must have at least a bachelor's degree corresponding to the field of activity concerned, and professional experience in Asia is always appreciated. They must be paid a minimum of RM5,000 per month and given a minimum two-year contract. Expats who are offered a monthly salary above RM10,000 will be automatically approved, as long as the requested documents are submitted by the company.
Besides, the company must comply with special conditions. It must be registered with the Companies Commission Malaysia, with the Companies Registry Malaysia, or with a cooperative registered under Malaysian law. It must also meet Paid-Up capital requirements and foreign equity in the business must be at least RM500,000. Additionally, the company must convince immigration authorities that it has vacancies that require skilled workers from other countries. Finally, a verification survey will be carried out on new arrivals by the intelligence offices of Malaysia. Once passed, a validation document, the Immigration Security Clearance, will be issued to the expatriate worker.
The administrative procedures are much heavier for foreign entrepreneurs or investors wishing to set up a business in Malaysia.
Promising sectors
Small and medium-sized enterprises (SMEs) account for most of the economic activity in Malaysia. According to the Malaysia Statistical Business Registrar (MSBR), in 2020, there were more than one million SMEs in Malaysia, representing 97.2% of the total number of companies in the country. On average, between 2015 and 2020, the SME sector grew by 4.9% per year.
According to the Minister for Domestic Trade, Cooperatives and Consumer Affairs, the SME sector is the largest employer in Malaysia, accounting for 65.5% of total employment in 2015 before falling back to 48% in 2020. The government recognizes that SMEs are a vital part of the economy, and strongly supports their development. More than 90% of SMEs are active in the service sector, while 6% of them operate in the industrial sector.
Manufactured goods, such as electronics and electrical products, dominate Malaysia's export market. Moreover, Malaysia is also one of the major oil and gas exporters in the Asia-Pacific region. The country, and in particular its capital Kuala Lumpur, is known in the region and beyond as a major trading hub in Southeast Asia. Besides, Kuala Lumpur is a real shopper's paradise for many Malaysians, residents and tourists looking for the finest and most luxurious clothing, accessories, equipment, and gadgets. However, there is a market for all types of consumers in Malaysia, provided you are cautious and don't trust the first comer. As a matter of fact, scams are not uncommon…
Malaysia's healthcare sector is thriving and the country has been hailed by the United Nations Development Program as “a model for other developing countries”. In 2010, the Economic Transformation Program (ETP) was established to transform Malaysia into a high-income economy by 2020, and the development of health services was one of the main objectives of this plan. Medical specialists, surgeons and general practitioners are in high demand. They can be sure of finding work in Malaysia, whether in private clinics, public institutions that are sorely understaffed, or in remote areas where there are very few doctors.
Under this initiative, healthcare has been identified as one of 12 national key economic areas, along with communication and infrastructure, palm oil, wholesale and retail, petroleum, gas and energy, financial services, business services, electronics and electrical, education, agriculture, tourism and the digital sector. The forward-thinking attitude shown by the government is leading to new markets, as well as novel business opportunities in these sectors for foreign talent.
Another interesting prospect for foreigners wishing to work in Malaysia, the digital sector has been booming over the past fifteen years. Many start-ups have been launched, mainly in Kuala Lumpur and a few other big cities. In 2021, the number of start-ups in the territory was estimated at around 3,000. The digitization of many public, parastatal institutions and private services and is a real door open to opportunities in Malaysia. The Malaysian digital revolution affects telecommunications, the services sector, health, administration, commerce, finance, banking, insurance, communication, journalism, research, archiving, video games, development applications and many other sectors.
Seeing a strong potential for growth, the government has invested heavily in the development of a national digital economy. Facilities for the creation of start-ups have also been put in place by competent authorities. In 2021, the Government of Malaysia launched the Malaysian Digital Economy Blueprint, a long-term strategy aimed at making the country a global platform for the development of start-ups. This strategy has already paid off: in its Global Start-up Ecosystem Report (2020), the international organization Start-up Genome cites Kuala Lumpur as an attractive destination for start-ups.
However, some professions remain strictly reserved for Malaysian citizens. On the Malaysian Immigration Department website, you can find a list of positions that are not allowed for expatriates.
Working conditions
In Malaysia, the Employment Act 1955 established the maximum working week of 48 hours and enforced the six-day working week, but be aware that many Malaysians work much longer regardless. Employees who have worked 1 to 2 years in the same company are entitled to eight days of paid leave per year, those who have worked 2 to 5 years get 12 days, and those who have worked more than 5 years are entitled to 16 days paid leave per year. Employees who have worked for the company for at least four months before giving birth are entitled to 90 days of maternity leave.
New employees are entitled to 14 days of sick leave in total for each calendar year if a licensed medical practitioner, paid and appointed by the employee, deems it necessary. Accumulating 2 to 5 years of employment for the same company gives the right to 18 days of annual sick leave, and if you have worked more than 5 years in the same company you will be entitled to 22 days of annual sick leave.
Since the entry into force of the law on the minimum retirement age in July 2013, the retirement age for employees in the private sector is now set at 60 years.
Social security
There are two social protection systems in Malaysia. They are managed by the Malaysian Social Security Organization, known as PERKESO. This entity receives monthly contributions from employers and employees to build up funds that will pay social security benefits in the event of an accident or illness. The employment insurance scheme provides protection for employees who sustain a workplace injury or a job-related illness. The disability plan covers employees who have become disabled or died from any cause unrelated to their employment. Employees under 60 who are already insured must contribute 0.2%. The same rate is applied to employers, which means that the total contribution amounts to 0.4%. In addition, an Employees Provident Fund (EPF) has been established to provide pension benefits to those working in the private sector or in the public sectors without a pension. Foreign workers with a temporary work permit who are legally employed in Malaysia are not required to contribute but can choose to contribute to the EPF if they wish. Contribution to Social Security is compulsory for Malaysians and all residents of the country.
As expatriates are required to receive a monthly salary above RM5,000, the employer's contribution will be 13%, while the employee's contribution is 9% if they are under 60 years of age. As a foreigner, you can withdraw all your savings at age 55 and return them to your home country via a foreign bank draft.
Coverage from the Foreign Worker Hospitalization and Surgery Program (FWHS) is also required for foreigners between the ages of 18 and 59 before their work permit can be issued. It is an annually renewable insurance scheme designed to reduce the financial burden of hospitalization costs for foreign workers.
Useful links:
Malaysian government official website
Immigration Department of Malaysia
Overview of Requirements for Expatriates
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