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IMPACT – MEDIUM
What is the change? A wide range of new immigration policies that affect employers with MSC or ICT status took effect today.
What does the change mean? The Malaysian Digital Economy Corp. (MDEC) agency announced the changes last month, and they touch on issues ranging from new requirements for first-time and renewal employment pass applicants to passport validity rules and processes for parents of newborn children.
Background: The new policies cover a wide range of issues and were announced in piecemeal fashion last month. Among key changes:
MDEC also announced last week that it would increase its enforcement of requirements on employment pass holders who switch employers, including requiring EP Category I and II holders to provide a release letter from their previous employer and have their current employment pass canceled when switching employers in country. This is not a new rule, but affected EP holders should anticipate stepped-up enforcement based on MDEC’s announcement.
BAL Analysis: Employers should take note of the changes and be prepared to adjust business and travel schedules if necessary.
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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About Berry Appleman & Leiden LLP Founded in 1980, Berry Appleman & Leiden (BAL) provides comprehensive global immigration services from seven offices across the U.S. and from offices in Geneva, London, Melbourne, Rio de Janeiro, São Paulo, Shanghai, Singapore and Sydney. BAL manages global visa matters and customized application approaches for work permits, business visas, and residence permits in more than 100 countries. With a single cost center for worldwide operations, BAL offers centralized management with regional and local support for the complete spectrum of global immigration matters.
Source: Berry Appleman & Leiden LLP
What is the change? The Malaysian Digital Economy Corp. (MDEC) has announced that it will increase its enforcement of requirements on employment pass holders who switch employers in Malaysia.
What does the change mean? EP Category I and II holders will be required to provide a release letter from their previous employer and will have their current employment pass canceled when switching employers in country.
Background: The change arose out of ongoing discussions between Malaysia’s immigration authorities and MDEC. Additional changes are expected.
BAL Analysis: Employers should take note of the change and make sure their internal processes have been updated accordingly. Discussions between the immigration authorities and MDEC are ongoing. BAL continues to monitor developments and will provide updates if additional changes are announced.
What is the change? As a follow-up to last week’s announcement, the Malaysian Digital Economy Corp. (MDEC) has released an additional requirement calling for Category III Employment Pass holders to fulfill a three-month cooling-off period outside of Malaysia.
What does the change mean? Foreign employees applying for a fourth year of a Category III Employment Pass, either as a renewal or as a change of jobs, must exit Malaysia and serve a three-month cooling-off period.
Background: Employment Pass Category III covers foreign nationals working in Malaysia for up to one year who are paid below the normal minimum salary of 5,000 ringgits (about US$1,240) per month. This pass is initially valid for one year and may be renewed twice. According to the new rule, at the end of the third year, employers who wish to sponsor the Category III worker for a fourth year must wait until the worker has exited Malaysia and satisfied a 90-day cooling-off period before they may apply.
BAL Analysis: Employers should be aware of the additional change and its impact on business schedules. MDEC authorities are expected to release a circular with further details on all the changes before the Sept. 1 implementation date.
What is the change? Beginning Sept.1, the Malaysian Digital Economy Corp. (MDEC) agency will start implementing numerous new policies that will affect employers with MSC or ICT status and foreign national employees and family members.
What does the change mean? Some of the changes are similar to the immigration rules announced by Malaysia’s Expatriate Services Division last month, including the requirement that all employment pass applicants and their dependents obtain an approval letter before traveling to Malaysia.
The changes cover a wide range of immigration-related policies, summarized as follows:
Other changes:
BAL Analysis: Employers should be aware of the changes and how they affect business and travel schedules. MDEC authorities are expected to release a circular with further details before the Sept. 1 implementation date.
IMPACT – HIGH
What is the change? Effective immediately, Sarawak state has lifted the moratorium on work permit applications for oil and gas companies.
What does the change mean? Although the freeze affecting work permit applications has been lifted, applications by Petronas (Malaysia’s national oil and gas corporation) and its subsidiaries can only be filed at Sarawak State Immigration Headquarters in Kuching.
Background: The Immigration Department in Sarawak has confirmed that the week-long moratorium on work permit applications has been lifted and that they have resumed processing work permit applications for oil and gas companies.
BAL Analysis: Applications from Petronas are still being scrutinized more closely, and they must now be submitted in Kuching, regardless of whether they are short-term or long-term work permits.
What is the change? Effective immediately, Sarawak state has put all work permit applications for oil and gas companies on hold until further notice.
What does the change mean? The freeze affects all work permit applications for all oil and gas companies in Sarawak, including new and renewal applications as well as applications that have been approved but not yet endorsed. Employees with valid work permits whose passports are endorsed with a permit sticker may continue to work.
Background: On Monday, all Immigration Department offices in Sarawak froze new work permit applications for Petronas, Malaysia’s national oil and gas corporation. By Tuesday afternoon, Sarawak state authorities extended the freeze to all oil and gas companies. Immigration Department offices in Sarawak are not accepting any oil and gas applications until they receive further direction from state authorities. The moratorium is reported to be a response to Petronas’ recent restructuring, which the Sarawak government asserts disproportionately affected Sarawakian workers.
BAL Analysis: Oil and gas industry officials are set to meet with the head of the Sarawak Immigration Department early next week. BAL will report on the outcome of those talks as information becomes available.
What is the change? Malaysia’s Expatriate Services Division is now strictly requiring that all employment pass applicants present their approval letter upon entering the country for work.
What does the change mean? Foreign employees and their dependents are advised not to travel to Malaysia until the first stage of the applications has been completed and they have received their approval letters.
Background: Effective Aug. 1, foreign nationals entering Malaysia for employment must show their approval letter issued by the Expatriate Services Division. Previously, foreign nationals could enter Malaysia and wait for the application to be approved while in-country. Under the new process, foreign employees and dependents must wait for their approval letters to be issued before traveling to Malaysia, and foreign nationals from controlled countries must also wait to obtain a visa with reference.
Expatriate employees applying to change employers may complete the process in-country, but if they leave the country and their existing employment pass expires, the Expatriate Services Division may require them to remain abroad until the approval letter is granted.
BAL Analysis: Companies with MSC and ICT status should prepare for a similar change, as the Malaysia Digital Economy Corporation (MDEC) is expected to follow suit and implement this rule as well. We are monitoring these developments and will provide updates as they become available.
What is the change? Starting Aug. 1, authorities will start implementing new policies and reinforcing existing regulations for work passes, including all categories of employment passes and professional visit passes.
What does the change mean? Notably, employers will no longer be able to include allowances when calculating the minimum salary for work permit eligibility. In the past, this was allowed on a discretionary basis. The rules also add stricter requirements for certain nationalities applying under the new employment permit category III.
Background: The new rules affect foreign workers applying for regular employment passes (category I), employment passes for a contract term of less than two years and meeting the minimum salary (category II), and employment passes for foreign nationals hired for a limited duration and earning less than the normal wage (category III, created last year).
The summary of new regulations is as follows:
Categories I & II
Category III
Professional Visit Pass
BAL Analysis: Although some of the policies have been in place for some time, the authorities are emphasizing strict reinforcement of all rules moving forward.
What is the change? Beginning June 1, MYXPats Centre will introduce application fees for Employment Pass, Dependant Pass and Social Visit Pass applications submitted online.
What does the change mean? The new government fees are in addition to existing filing fees charged by Malaysia’s Immigration Department.
Background: MYXpats Centre announced the following application charges:
The Centre indicated that the application fees are being introduced to improve services and to maintain processing times. According to the Centre, since it took over processing of pass applications in 2015, it has approved 74 percent of Employment Pass applications within five days.
BAL Analysis: Employers and foreign nationals should budget for the new government fees.
What is the change? All non-MSC companies must submit 2016 foreign knowledge worker projections as soon as possible to avoid delays in hiring or renewals next year.
What does the change mean? Non-MSC companies are advised to file their FKW projections as soon as possible in order to avoid the end-of-year crush of applications. Projections must be submitted via the Expatriate Services Division online portal.
Background: FKW projections should be provided for four categories of workers: high-level managers, technical experts, mid-level managers and entry level/junior managers. The projections must include the expected number of new hires and renewals of existing employment passes in each category. FKW projections do not need to include estimates of the number of professional visit pass applications that a company may submit in 2016.
Companies in the information and communication technology industry holding MSC status are not required to submit the FKW projection. While the projections have been required in the past, this year marks the first year that they must be submitted through the Expatriate Services Division online portal.
BAL Analysis: Non-MSC companies are required to file FKW projections before they are permitted to file new or renewal employment pass applications. Affected companies should submit their projections as soon as possible in order to avoid delays. Contact your BAL professional if you are in need of assistance or have any questions.