The Ministry of Home Affairs (KDN) has officially announced a comprehensive restructuring of Malaysia’s expatriate employment policy, which will come into force on June 1, 2026.
This policy overhaul, aligned with the 13th Malaysia Plan (13MP) and Malaysia MADANI principles, introduces significantly higher salary thresholds and stricter employment duration limits. The goal is to reduce reliance on foreign expertise and accelerate the development of local talent through structured succession planning.
Here is what employers need to prepare for before the June deadline.
1. New Salary Thresholds (Effective June 1)
The minimum monthly base salaries for Employment Pass (EP) categories have been raised drastically.
- Employment Pass Category I (Top Management)
- New Requirement: RM20,000 and above
- Previous: RM10,000 and above
- Employment Pass Category II (Professional & Managerial)
- New Requirement: RM10,000 – RM19,999
- Previous: RM5,000 – RM9,999
- Employment Pass Category III (Technical & Skilled)
- New Requirement: RM5,000 – RM9,999
- Previous: RM3,000 – RM4,999
- Important Exception: For the Manufacturing & Manufacturing-Related Services (MRS) sectors, the minimum is set higher at RM7,000 – RM9,999.
2. New Employment Duration Limits
For the first time, the government has introduced specific “caps” on how long an expatriate can hold a pass to ensure knowledge transfer.
- Category I: Capped at 10 Years.
- Category II: Capped at 10 Years (Subject to a Succession Plan).
- Category III: Capped at 5 Years (Subject to a Succession Plan).
(Note: Holders of all three categories are still permitted to bring dependants.)
3. Implementation & Engagement Sessions
To ensure a smooth transition that does not disrupt business operations, KDN has assured that these reforms will be implemented gradually.
The Ministry will conduct briefings and engagement sessions with all stakeholders—including industry players and employers—in the coming months to explain the implementation mechanism. We strongly advise clients to attend these sessions to understand the practical implications for their workforce.
What This Means for Employers
The “grace period” until June 1 is designed to allow sufficient preparation time. However, the introduction of mandatory Succession Plans for Categories II and III means you must now prove you are actively training local staff to replace foreign talent.
We advise all clients to review their current expatriate workforce and prepare for these higher cost implications and compliance requirements immediately.
Source: Bernama – New Expatriate Employment Policy Takes Effect June 1
