Important Reminder for Enterprises Expanding into Malaysia
Malaysia’s major new labour regulations officially took effect on 1 June. Under the updated policy, the salary threshold for foreign Employment Pass (EP) visas is administered separately from the national minimum wage for local employees.
Requirements for EP visas assigned to expatriate senior management have been significantly tightened. The minimum monthly salary for EP Category I roles has doubled to RM 20,000, while salary benchmarks for other EP tiers have also been raised. Each visa application fee has increased by RM 2,000. In addition, the new rules stipulate that expatriate salaries cannot be fully disbursed in China; personal income tax must be declared in Malaysia. Companies are also required to formulate succession plans. EP visas for senior executives can no longer be renewed indefinitely. All firms deploying staff to Malaysia must make compliance arrangements well in advance.
New Policy for Malaysia Employment Pass (EP)
Scope of Application
The new standards apply to all new applications and renewal submissions received by the Immigration Department on or after 1 June with no exceptions.
Key Distinction
The EP visa salary threshold is a mandatory requirement for foreign staff visa approval, independent of Malaysia’s local minimum monthly wage of RM 1,700. The two benchmarks cannot be used interchangeably.
Transition Period
Applications fully submitted and accepted by authorities prior to 1 June remain subject to the old salary criteria. Existing valid EP visas approved under previous rules only need to meet the new salary requirements upon their next renewal.
Comparison of Minimum Monthly Pre-tax Basic Salaries Across Three EP Tiers
Allowances are excluded from the qualifying salary calculation.
Additional Industry Restriction
For EP Category III applications in manufacturing and industrial services, the minimum salary has been raised from RM 5,000 to RM 7,000 per month. Applications for expatriate assignments in these sectors with monthly basic salaries between RM 5,000 and RM 6,999 will no longer be accepted.
Official Salary Calculation Rules (Strictly Enforced by Immigration Department)
Only fixed basic salary is recognised as eligible income:
✅ Included: Fixed base salary
❌ Excluded: Housing allowance, transport allowance, meal subsidy, performance bonus, year-end dividend, and salary paid by the parent company overseas.
Salary splitting is prohibited. Companies cannot pay part of an employee’s remuneration in China and only the base salary locally in Malaysia to meet the threshold. Joint inspections by the Immigration Department and Inland Revenue Board will result in immediate visa rejection and placement of the company on a regulatory blacklist if such violations are detected.
Two Major Regulatory Overhauls
1. Maximum Cumulative Working Period for Foreign Employees (Unlimited Renewals Permanently Abolished)
- EP I & EP II: A maximum cumulative working tenure of 10 years in Malaysia. Renewal applications will generally be rejected upon expiry. Only senior executives of national-level investment projects may apply for case-by-case tenure extensions with a very low approval rate.
- EP III: Limited to a cumulative 5 years. Holders must either depart Malaysia or apply for permanent residency upon expiry; repeated short-term EP renewals are not permitted.
Tenure is calculated on a lifetime cumulative basis, with periods accrued resuming even if the employee exits and re-enters Malaysia.
2. Mandatory Local Talent Succession Plan for EP II and EP III Holders
Document Requirements
Subject to approval by Malaysia’s Ministry of Human Resources, the plan must cover:
- Job responsibilities and knowledge transfer timelines;
- Training frameworks and assessment milestones for Malaysian local employees;
- A clear timeline specifying that the foreign position will be taken over by a local Malaysian employee within a defined number of years.
Authorities will conduct random follow-up audits on implementation. Failure to execute the succession plan will result in a freeze on all future EP quota approvals for the company.
Internship Quota Obligations
- EP II: For every approved foreign employee, the company must create 2 internship positions for Malaysian locals.
- EP III: For every approved foreign employee, the company must create 3 internship positions for Malaysian locals.
Applications featuring fictitious internship roles will be rejected outright.
Gonex Malaysia Work Visa Solutions
Gonex provides compliant and efficient localised work visa services for enterprises expanding into Malaysia. We deliver end-to-end work visa support for expatriate assignees. Supported by sufficient official visa quotas and fully accredited sponsoring employer qualifications, we process employment passes, work permits, residence permits, visa renewals, visa amendments and dependent family visas to ensure smooth business deployment for overseas teams.
Our professional local compliance team possesses in-depth expertise in Malaysian immigration legislation and legal liabilities. We proactively identify and mitigate common visa rejection risks, enabling enterprises to secure expatriate work permits efficiently and conduct business in Malaysia in full regulatory compliance.
Why Gonex?
Experienced Management Team: each member in the team has 10+ years experiences in Overseas Human Resources Management, composed of seasoned HR professionals.
Powerful connection: Gonex has established over 10 entities worldwide, along with more than 30 stable partners, together offering the most comprehensive overseas human resource services to our clients.
Strict compliance with laws and regulations: At every step in our service process, Gonex strictly adheres to local laws and regulations, ensuring our clients completely avoid any legal disputes.
Competitive price: Gonex’s services are 20% more affordable compared to other companies in the industry, allowing our clients to allocate more resources to their core business.
What Gonex offer?
Employment of Record: This service helps clients legally hire employees in countries or regions where they do not have a legal entity established.
Payroll BPO service: This includes payroll project implementation plan development, project deployment, payroll calculation, payment of funds, administration of statutory and supplementary benefits, customized reporting, and other comprehensive payroll services.
Global Mobility: Based on the company’s internationalization strategy, the company assigns employees to overseas branches/subsidiaries and handles visa and tax matters in accordance with local policies, while assisting in the compliance management of employees throughout their international assignment life cycle.
GONEX One-Stop Solution: Your strategic partner
Compliance and Legal Adherence: GONEX’s Employer of Record (EOR) service ensures legal compliance in employing local staff.
Cross-Border Payroll and Tax Management: Streamlined payroll services simplify cross-border management.
Flexible Employment Solutions: Adaptable employment services cater to changing business needs.
International Talent Dispatch: Support services facilitate the dispatch of key talent to overseas.
Digital HR Management Platform: Technology-driven solutions enhance management efficiency and cultural integration.
Who do we serve?
Gonex served 70+ clients to expand overseas. The incomes of our clients like Mengniu, Kuaishou and CHINT are up to 192.4 billion.
Let Gonex assist you and your company with handling such complex overseas hiring processes! To access more information on corporate international expansion cases, global employment guidelines, worldwide compensation management, regulations for various regional countries, and factory establishment manuals in different nations, you are welcome to visit the GONEX official website at www.letsgonex.com to download these resources or view our company’s business introduction in PDF format (https://letsgonex.com/in.pdf).
