IMPACT – MEDIUM

What is the change? The Malaysia Digital Economy Corporation has announced changes to employment pass salary and contract requirements.

What does the change mean? Effective Sept. 1, employment pass submissions to MDEC must adhere to the new criteria. The salary minimum for foreign nationals seeking Category 1 employment passes will be set at 10,000 ringgits (about US$2,340) per month. Category II pass holders will have to be paid between 5,000 and 9,999 ringgits per month. Category III pass holders will have a salary requirement of 3,000 to 4,999 ringgits per month. Contract requirements will also change so that Category I permit holders will be allowed to apply for passes valid for up to five years. Category II permit holders will have to have a contract valid for up to two years. MDEC is adopting the changes after the MYXpats Centre announced similar changes in April.

  • Implementation time frame: Sept. 1.
  • Visas/permits affected: Employment passes (categories I, II and III).
  • Who is affected: Companies under MSC or ICT status submitting employment pass applications to MDEC.
  • Impact on processing times: No impact expected.
  • Business impact: Employers may see increased costs to meet the new salary requirements.

Additional information: Malaysia’s MYXpats Centre announced a similar Employment Pass re-classification in April, and this week MDEC said that it will follow suit. The changes will be made Sept. 1:

Employment Pass Type Requirement from Sept. 1 Contract Requirement Requirement from Sept. 1
Category I (Expatriate) RM 10,0000 Minimum of two years Up to five years
Category II

(Expatriate)

 RM 5,000 – RM 9,999 Less than two years Two years or less
Category III (Knowledge/
Skill Workers)		 RM 3,000 – 4,999 Up to a year (renewable twice) Up to a year (renewable twice)

MDEC indicated that all other requirements for submitting employment pass applications will remain unchanged unless further notice is provided.

BAL Analysis: MDEC’s changes to the salary requirements for employment pass holders are fairly significant, especially in Category 1, where the minimum salary will double to 10,000 ringgits per month. Employers who are affected should take note of the pending changes and budget accordingly.

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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