Malaysia’s New Visa Policies Spark Uncertainty for Expats, Businesses
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Malaysia is navigating a delicate balance between bolstering its local workforce and maintaining its appeal to foreign expertise, as recent adjustments to expatriate visa policies have triggered concerns among the international community and prompted strategic shifts from businesses operating within the country. The changes, centered around the evaluation of contract extensions for Employment Passes (EPs), have raised questions about long-term stability and investment.
The debate over whether expatriates displace local workers is, according to leading economists, largely unfounded. “Firstly, there are too few expatriates to make that claim meaningful. Secondly,it is indeed already costly to pay for visas,so they are not competitive in a cost sense,” noted a prominent economist in a recent LinkedIn post. “Thirdly, expatriates are employed for very specific reasons based on experience and expertise. This will not change.”
Rising EP Numbers Amid Policy Shifts
The Malaysian Immigration Department issued 180,812 EPs – encompassing both new applications and renewals – in 2025, a notable increase from the 160,380 passes granted in 2024. As of October 2025, Malaysia’s total employed population stood at 17.06 million. Despite these figures, the manner in which the policy changes have been communicated – suggesting a potential unwelcoming stance towards expatriates – is proving more impactful than simple comparative statistics.
“It is not so much the comparison to regional countries that counts, but the way it has been communicated – ‘that Malaysia dose not want expats somehow’,” one analyst explained.
Fears of Departure and Contract Uncertainty
The evolving visa landscape has fueled anxieties within the expatriate community, with many fearing they might potentially be forced to leave Malaysia once their current contracts expire. These concerns stem from the Home Affairs Ministry’s clarification that contract extensions will be assessed on a case-by-case basis, prioritizing “national interest.”
This lack of clarity is impacting business confidence. “Stability is also critically importent. If it changes too much you cannot plan long-term and if the visas are short then you don’t invest or commit here,” a senior official stated.
Businesses Respond with Workforce Adjustments
Companies are already adapting to the new surroundings.According to Sasha Reddy, Malaysia partner at vialto Partners, a global mobility firm, clients are implementing both immediate workforce adjustments and long-term strategic planning. “Some have raised concerns about increased operating costs, potential losses in productivity and innovation, and risks to business continuity,” she said.
These concerns are especially acute in specialized sectors. “These concerns are particularly pronounced in niche and highly specialised areas such as advanced engineering, high-end manufacturing, digital transformation, and energy transition, where the local talent pipeline remains limited and businesses have traditionally relied on expatriate expertise.” Vialto Partners’ client base includes both multinational companies (MNCs) and small- and medium-sized enterprises (SMEs) across diverse industries, including financial services, oil and gas, and electrical and electronics.
to mitigate disruption, companies are actively reassessing their recruitment strategies, focusing on strengthening local talent acquisition. Where necessary, some are even considering relocating roles or employees to other countries.A “thorough review of salary structure” is also underway, comparing expatriate compensation to local talent availability, alongside the implementation of training programs designed to foster local succession planning.
Long-term Optimism for Local Talent Development
Despite the immediate challenges, there is cautious optimism surrounding the policy’s long-term objectives. The expectation is that this approach will ultimately cultivate a sustainable pipeline of skilled Malaysian professionals capable of filling senior and specialized roles. This, in turn, is projected to enhance local earning potential and bolster Malaysia’s long-term economic competitiveness.
