Employing foreign professionals (in immigration terms referred to as “expatriates”, regardless of their contractual situation) in Malaysia is not difficult and does not require any specific quota contrary to hiring foreign workers. It is important to mention that only local entities can employ foreign professionals in Malaysia, regardless of whether they are hired permanently or being sent to Malaysia for short-term assignments. The reason why this right is reserved to local entities is that permit applications are submitted online and the platforms require prior and local registration, as well as compliance with statutory requirements such as social security payments and monthly income tax deductions. Also, entities must justify why they intend to hire foreign professionals.
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Types of Permits for Employing Foreign Professionals in Malaysia
Local entities can hire foreign employees and apply for different types of permits. It is important to know that there are restrictions for companies that only have regional and representative offices in Malaysia. Regional and Representative offices are not allowed to apply for Professional Visit Passes. Consequently, they are not authorised to hire foreign interns or bring in foreign short-term staff.
The following table provides an overview of which entity is allowed to request which approval types by using the accurate application mode:
Regional or representative office
Permit type:
- Employment Pass
- Dependant Pass
- Social Visit Pass
- Maid Visa
- Special Pass
Application mode:
At MIDA directly. Estimation processing time between two (2) to three (3) months as the position needs to be approved first. Upon approval, pass to be applied via ESD account
Branch office
Permit type:
- Employment Pass
- Professional Visit Pass
- Dependant Pass
- Social Visit Pass
- Maid Visa
- Special Pass
Application mode:
ESD or MDEC
Private Limited (Sdn Bhd)
Permit type:
- Employment Pass
- Professional Visit Pass
- Dependant Pass
- Social Visit Pass
- Maid Visa
- Special Pass
Application mode:
ESD or MDEC, MIDA also for employment passes in the manufacturing sector for term and/or key post.
Public company limited by guarantee
Permit type:
- Employment Pass
- Professional Visit Pass
- Dependant Pass
- Social Visit Pass
- Maid Visa
- Special Pass
Application mode:
ESD
Public company limited by shares (Bhd)
Permit type:
- Employment Pass
- Professional Visit Pass
- Dependant Pass
- Social Visit Pass
- Maid Visa
- Special Pass
Application mode:
ESD or MDEC, MIDA also for employment passes in the manufacturing sector for term and/or key post.
Society
Permit type:
- Employment Pass
- Professional Visit Pass
- Dependant Pass
- Social Visit Pass
- Maid Visa
- Special Pass
Application mode:
ESD
Limited liability partnership (LLP)
Permit type:
- Employment Pass
- Professional Visit Pass
- Dependant Pass
- Social Visit Pass
- Maid Visa
- Special Pass
Application mode:
ESD
Employing Foreign Workers in Malaysia
The Employment Act 1955 defines “foreign workers” as employees who are not citizens*. To employ foreign workers there are several requirements that must be met. Companies should take note of the restrictions on hiring foreign employees, such as limiting hiring to sectors such as construction, manufacturing, agricultural, plantation and services sectors.
Apart from that, employment of foreign workers is also subjected to specific quota requirements from the Ministry of Home Affairs (MOHA).
* Immigration Act 1955, s. 2 (1).
Quota and eligibility
As an employer, you must first obtain approval from the Local Centre of Approval from the Ministry of Home Affairs (MOHA) to hire foreign workers to work for Malaysian based companies.
Generally, companies operating in construction, agriculture, plantation, manufacturing and services industries may be approved to hire foreign workers. Once the application is submitted, an interview will take place with the employer and an authorized representative from the Ministry of the particular sector the company conducts business in. Once the application is successful, a conditional letter of approval is issued to the employer to allow the hiring of foreign workers.
Sending staff to Malaysia or Hiring Foreign Interns
Sending foreign staff to Malaysia is a normal process and many companies are regularly doing so in order to provide, for example, specialised after sales services. However, this requires careful planning in advance as companies should check the visa and work permit requirements, liability to personal income tax or insurance coverage in advance.
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Getting started
Most activities in Malaysia require a work permit. This includes consultancy, providing training or the maintenance or repair of machinery in production or work executed by independent consultants, service engineers, technicians or construction supervision etc. Although a repair or service can be urgent, it is not possible to apply for work permits or visa over night or within 48 hours as supporting documents are required. Additionally, the minimum processing time for most permit applications is fourteen (14) working days and additional time should be calculated to schedule an appointment at the respective Embassy or Consulate office of Malaysia in order to apply for a Single-Entry Visa.
Short-Term (12 months) vs. Internships and Trainings (up to 6 months) in Malaysia
| Short-Term assignments up to 12 months | Internships and trainings up to 6 months (interns) | |
|---|---|---|
| 1 | Check if the client/customer/subsidiary is registered at ESD and able and willing to apply for a PVP. Some companies may not be registered as their paid-up capital is too low and they never had foreign professionals working at their company. | Check if the company you want to do your internship or training with is registered at ESD and able and willing to apply for a PVP. Some companies may not be registered as their paid-up capital is too low and they never had foreign interns. |
| 2 | Check your timeframe and be realistic. If they are not registered yet, calculate additional three (3) months for the registration at the authorities before any Professional Visit Pass can be applied for. | Check your timeframe and be realistic. If the company is not registered yet, chances are low that they will register just to host a foreign intern. Also, give yourself sufficient time to organize the entire procedure. |
| 3 | The cooperation of the local company is absolutely necessary as it has to provide documents, apply for the PVP and take care of the employee while he or she is in Malaysia. | Avoid companies that refuse to apply for the mandatory work permit. |
| 4 | Get the applicable documents translated and certified. Get the required checklist and templates for the PVP application from the local company or a service provider. | Get applicable documents translated and certified. Although this may just be an internship, applicants have to follow the same requirements as any other applicant. |
| 5 | Your passport needs to be valid for at least 12 months on the day of the PVP application is submitted. Verify, if the employee’s passport is still valid for more than 12 months. If the validity is less, the passport has to be renewed before. | Your passport needs to be valid for at least 12 months on the day the PVP application is submitted. Verify if your passport is still valid for at least this duration. If the validity is less, the passport has to be renewed before. |
| 6 | Check with HR on insurance coverage, social security payments and income tax liability etc. In case the employee is liable to Malaysian income tax, the client/customer/subsidiary has to register him or her at LHDN and this requires a corporate registration in Malaysia. | If you get an allowance or payment by the Malaysian company, you may be liable to Malaysian income tax depending on the duration of the internship. The company has to register you at LHDN and this requires a corporate registration in Malaysia. |
| 7 | Employees should only enter Malaysia, if the PVP has been approved. Do not send any employee to work in Malaysia without a PVP! Illegal work is a criminal offence under Immigration laws. | Interns should only enter Malaysia if the PVP has been approved. Illegal work is a criminal offence under Immigration laws. |
| 8 | Stay in touch with the local company and/or the service provider. | Stay in touch with the local company. |
| 9 | Important note: If you engage a service provider, the local company also needs to cooperate with the service provider as they need access to the ESD account of the local company. | Important note: In order to apply for a PVP, foreign students have to engage with a foreign university. Interns need to find a suitable company at first, cancel their Student Pass and ask the company to apply for a PVP. |
| 10 | To check and ensure the local company comply with Malaysian regulations by obtaining necessary and updated licenses. | To check and ensure the local company comply with Malaysian regulations by obtaining necessary and updated licenses. |