Malaysia’s Investment, Trade and Industry Minister Datuk Seri Johari Abdul Ghani announced on November 2, that the government will reject new manufacturing licence applications that perpetuate heavy reliance on low-skilled foreign labor, warning that the country’s entrenched dependence on 2.6 million migrant workers must be addressed.
Malaysian manufacturers have long enjoyed a steady stream of inexpensive labor, but the Ministry of Investment, Trade and Industry has drawn a hard line against perpetuating that model. Minister Datuk Seri Johari Abdul Ghani told the Dewan Rakyat during oral question time that authorities will block incoming factory projects that fail to embrace automation and digital transformation. Rather than letting businesses replicate decades-old staffing strategies, the government is tightening the screws on who gets to open shop in the country.
The policy stance arrives as industrial labor statistics reveal a stark inversion of national targets. While official planning calls for an 80:20 ratio favoring local workers over migrants, many sectors have seen those numbers completely flipped, with migrant labor accounting for 80 percent of the workforce and locals making up the remaining 20 percent. Johari stressed that Malaysia records approximately 2.6 million registered foreign workers, a figure that excludes undocumented individuals and remains a major challenge that must be addressed in stages.
Wages, Minimum Pay, and the TVET Graduate Crunch
The friction between industrial employers and domestic talent centers squarely on compensation. Even with the national minimum wage stepping up to RM1,700, many established companies continue offering technical and vocational graduates starting salaries that match what they would pay migrant manual laborers. Malaysia produces approximately 400,000 graduates from Technical and Vocational Education and Training programs, yet these skilled young workers find themselves staring down entry-level pay scales that fail to cover living costs.
Unfortunately, some of these companies want to pay TVET graduates at foreign-worker wage levels.
Datuk Seri Johari Abdul Ghani, Investment, Trade and Industry Minister
The economic disconnect goes beyond base pay. Certain businesses house local technicians inside quarters designated for foreign labor while forcing them to pay out-of-pocket rent elsewhere. Johari took direct aim at profitable corporations that rake in hundreds of millions of ringgit yet balk at lifting starting local wages to RM2,000, arguing that locals refuse these posts simply because the jobs do not provide sufficient economic value.
Restricting Foreign Recruitment to Dirty, Dangerous, and Difficult Jobs
To break this cycle, MITI and the Malaysian Investment Development Authority are enforcing strict functional limits on foreign recruitment. Officials will clarify to any inquiring enterprise that permission to hire migrant workers comes with a non-negotiable caveat: those workers must stay strictly confined to “3D” positions defined as dangerous, difficult, and dirty.
Johari cautioned that loosening recruitment rules would only feed the exact dependency the state is trying to shatter. Any newcomer asking for a fresh license to run a low-tech, labor-intensive operation will hear a flat refusal.
Progress Metrics Under the New Industrial Master Plan 2030
Rather than pushing lower-technology manufacturing out of the country, the ministry is using the New Industrial Master Plan 2030 to shepherd existing factories toward digital upgrades, advanced machinery, and automation grants. The following performance milestones have been tracked since the policy’s launch in September 2023:
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| NIMP 2030 Metric | Current Status | 2030 Target |
|---|---|---|
| Manufacturing Value-Add | RM399 billion | RM587.5 billion |
| Job Creation | 2.8 million jobs | 3.3 million jobs |
| Average Monthly Salary | RM2,775 | RM4,510 |
To ensure these structural targets become reality, MITI is working to ensure data collected reflects structural changes in the industry and helps the government formulate strategies. Minister Johari warned that leaving the current system unaddressed will inflict damage on the country in the future.