IMPACT – MEDIUM

What is the change? Employers are reminded that employment pass salary and contract requirements are set to change Sept. 1.

What does the change mean? The changes will apply to foreign workers whose applications are filed to the MYXpats Centre or the Malaysia Digital Economy Corporation. Once they take effect, the salary requirement for foreign nationals seeking Category 1 employment passes will double to 10,000 ringgits (about US$2,250) per month. Category II pass holders will have to be paid between 5,000 and 9,999 ringgits per month. And Category III pass holders will have a salary requirement of 3,000 to 4,999 ringgits per month. Contract requirements will also change so that Category I permit holders will be allowed to apply for passes that are valid for up to five years. Category II permit holder will have to have a contract that is valid for up to two years.

  • Implementation time frame: Sept. 1.
  • Visas/permit affected: Employment Passes (categories I, II and III).
  • Who is affected: Employers submitting employment pass applications to the MYXpats Centre or the Malaysia Digital Economy Corporation. The changes will not affect current employment pass holders or their employers.
  • Impact on processing times: No impact is expected.
  • Business impact: Employers may see increased costs to meet the new salary requirements, but will have the benefit of being able to employ qualifying foreign nationals on longer-term contracts.

Background: The MYXpats Centre announced the changes in April and MDEC followed suit in May. The requirements below will be implemented Sept. 1:

Employment Pass Type Requirement from Sept. 1 Contract Requirement Requirement from Sept. 1
Category I (Expatriate) RM 10,0000 Minimum of two years Up to five years
Category II (Expatriate) RM 5,000 – RM 9,999 Less than two years Two years or less
Category III (Knowledge/ Skill Workers) RM 3,000 – 4,999 Up to a year (renewable twice) Up to a year (renewable twice)

Authorities have indicated that all other requirements for submitting employment pass applications will remain unchanged unless further notice is provided.

BAL Analysis: The changes mean that employers will have the option of employing high-skilled foreign workers for longer periods of time, but at a cost. The change for Category I workers is particularly significant, given both that contracts of up to five years will be accepted and that the salary requirements will double to 10,000 ringgits per month. While other employment pass requirements have not changed at this point, additional changes are possible.