Recent policy shifts in Malaysia regarding work permits are causing uncertainty for expatriates and prompting businesses to reassess their workforce strategies. The changes center around the evaluation of contract extensions for expatriate workers, which will now be assessed on a case-by-case basis determined by “national interest,” according to a clarification document issued by the Home Affairs Ministry.
Work Permit Numbers and Economic Context
The number of Employment Passes (EPs) issued by the Malaysian Immigration Department increased to 180,812 in 2025, up from 160,380 in 2024. This occurs within a national employment context of 17.06 million people employed as of October 2025.
Debunking Claims About Job Displacement
Economist Geoffrey Williams, director of Williams Business Consultancy, disputes the notion that expatriates are displacing local workers. He argues there are “too few expatriates” for this claim to be significant, and that visa costs already make them less competitive on price. Williams further stated that expatriates are hired for specific expertise and experience that remains in demand.
Business Responses and Concerns
Companies operating in Malaysia are responding to the evolving policy landscape with both short-term adjustments and long-term planning, according to Sasha Reddy, Malaysia partner at Vialto Partners, a global mobility firm. Concerns raised by clients include potential increases in operating costs, risks to productivity and innovation, and potential disruptions to business continuity.
These concerns are particularly acute in specialized fields like advanced engineering, high-end manufacturing, digital transformation, and energy transition, where a sufficient local talent pipeline is not yet established. Companies are now reassessing recruitment strategies, prioritizing local talent, and considering relocating some roles to other countries.
A review of salary structures for both expatriate and local employees is also underway, alongside the implementation of training programs designed to foster local succession planning. Despite these concerns, some companies express cautious optimism about the policy’s potential to develop a stronger local professional base.
Frequently Asked Questions
What is driving these changes in Malaysia’s expatriate policies?
The changes are being implemented based on a determination of “national interest” by the Home Affairs Ministry, as communicated in a clarification document.
What sectors are most likely to be affected by these changes?
Industries relying on niche and highly specialized expertise, such as advanced engineering, high-end manufacturing, digital transformation, and energy transition, are expected to be particularly impacted.
Is the claim that expatriates are taking jobs from locals accurate?
According to economist Geoffrey Williams, the claim is not accurate, citing the relatively small number of expatriates and the existing costs associated with obtaining visas.
How might these changes affect Malaysia’s long-term economic goals?
