Malaysia

Income requirement imposed on workers sponsoring dependents

7 Jan 15

MALAYSIA

IMPACT – MEDIUM

What is the change? Employment Pass holders whose monthly income is less than 5,000 Malaysian Ringgits (about US $1,400) are no longer eligible to sponsor spouses or children on Dependent Passes.

What does the change mean? It will be significantly harder for a number of foreign nationals working in Malaysia to live in Malaysia with their spouses and children.

  • Implementation timeframe: Immediate.
  • Visas/permits affected: Dependent Passes.
  • Who is affected: Foreign nationals and dependents of foreign nationals who earn less than 5,000 Malaysian Ringgits per month.
  • Impact on processing times: There is no anticipated impact on processing times.
  • Business impact: The change could make it harder for businesses to recruit foreign nationals, because those earning less than 5,000 Malaysian Ringgits cannot sponsor dependents and might be disinclined to move to Malaysia to work.
  • Next steps: Companies should take the new salary minimum into consideration when considering job applicants and setting salary levels for foreign nationals working in Malaysia.

Background: The change came about as a result of a joint decision between Malaysia’s immigration authorities and its Multimedia Development Corporation (MDeC). The decision initially covered ICT status companies, but was extended to cover MSC status companies, too.

Current Dependent Pass holders whose sponsor’s salary falls below the new minimum can remain until the expiration of their current passes. A renewal request will be denied, however, unless the Employment Pass holder’s salary rises above 5,000 Malaysian Ringgits per month.

BAL Analysis: While the policy change will not affect foreign nationals making more than 5,000 Malaysian Ringgits a month, it has a big impact on those making less than that amount and will make it significantly more challenging for them – if not impossible – to live with their families in Malaysia. The change could hinder employers’ ability to recruit foreign nationals as well, because one factor workers might consider before accepting an assignment in Malaysia is the ability to be with their dependents.

This alert has been provided by the BAL Global Practice group and our network provider located in Malaysia. For additional information, please contact your BAL attorney.

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