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IMPACT – MEDIUM
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.
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.
Copyright © 2016 Berry Appleman & Leiden LLP. All rights reserved. Reprinting or digital redistribution to the public is permitted only with the express written permission of Berry Appleman & Leiden LLP. For inquiries please contact copyright@bal.com.
What is the change? Malaysia will introduce a new employment pass category this month.
What does the change mean? Employment Pass (Category III) will be available to foreign nationals working on contracts of 12 months or less and with monthly salaries ranging from 2,500 to 4,999 Malaysian ringgits (about US$665 to $1,330).
Background: Employment Pass (Category I) is Malaysia’s regular work permit, while Employment Pass (Category II) is reserved for foreign graduates of Malaysian universities employed by reputable firms in Malaysia. Category III passes will allow some employers to hire foreign nationals for a limited duration and pay them below the normal wage minimum. The July 1 announcement of a third category was unexpected, and officials say the passes will be available beginning July 15.
To file an application in Category III, companies will be required to secure a letter exempting them from paying the normal minimum salary of RM 5,000 per month. The exemption letter must be obtained from either the appropriate monitoring agency or, if the applicant works in an unregulated economic sector, the Ministry of Home Affairs. The letters are then filed with the rest of the application via the Expatriate Services Division online portal.
Holders of Category III passes will not be permitted to sponsor dependents or hire foreign housekeepers. The passes are subject to review and renewable twice. For more information, visit Malaysia’s Expatriate Services Division website.
BAL Analysis: The change was announced as part of a “reclassification” of Employment Pass categories. BAL will update clients on procedures to apply for the new employment passes as information becomes available.
What is the change? Malaysia’s Multimedia Development Corporation has announced its holiday schedule for the Hari Raya Aidil Fitri (Eid al-Fitr) holiday in July.
What does the change mean? To avoid processing delays, applicants must take note of the scheduled office closures and submission cutoff dates.
Background: In celebration of the holiday immediately following the month of Ramadan, the e-Xpats Centre will be closed July 16-19, resuming work July 20. MDeC has announced the following deadlines for Stage 1 and 2 applications prior to the holiday:
Stage 2 applications received from June 19 onward will be processed without original passports for security reasons. Passport submission for Stage 2 processing will resume as normal on July 20. Applications submitted without an original passport must contain copies of the following pages of an applicant’s passport:
Note that the Stage 2 submission cutoff date only applies to MSC-status companies. The ICT-status companies may continue to file applications directly to the Immigration Unit as normal.
BAL Analysis: In order to avoid delays in processing time, employers are encouraged to submit applications according to the cutoff dates provided by the authorities.
What is the change? Malaysia’s launch of the Malaysia Expatriate Talent Service Centre (MYXpats Centre) to take over Employment Pass applications is expected soon.
What does the change mean? The government is expected to release an announcement on the official launch date. In the meantime, all Employment Pass and related applications will continue to be processed by the immigration office in Putrajaya until further notice.
Background: Currently, company registration and online submission of Employment Passes and related passes are handled by the Expatriate Services Division in Putrajaya. Once implemented, MYXpats Centre will handle Employment Pass submissions and related matters. ESD will continue to manage company registrations.
MYXpats Centre will be jointly run by the Immigration Department and Talent Corporation Malaysia, and falls under the Ministry of Home Affairs.
BAL Analysis: The government is expected to provide guidance to employers on the launch of MYXpats Centre and any new procedures for submitting Employment Pass applications. BAL is following these developments and will update clients when information is available.
What is the change? Malaysia has adopted new rules that will require supporting documents for certain MSC status company applications to be submitted electronically. The changes affect Employment Pass, Dependent Pass and Long-Term Social Pass applications.
What does the change mean? Beginning April 13, applicants will be required to file copies of passports and other supporting documentation via the online e-Xpats system. Those who do not follow the new filing requirements risk having their applications rejected.
Background: Malaysia has taken a number of steps over the past year to move toward electronic filing and processing of immigration-related documents.
The most recent changes affect both Stage 1 (approval) and Stage 2 (endorsement) of applications for Employment Passes, Dependent Passes and Long-Term Social Passes. Employment Pass applicants will be required to submit copies of passports, resumes and educational certificates, among other supporting documentation. Checklists of required supporting documents vary significantly depending on what type of pass an applicant is seeking, the phase of the application, and, in some cases, the applicant’s nationality. Checklists for documents that are required can be found on MSC Malaysia e-Xpats Centre’s website.
In a related change, Malaysia’s Multimedia Development Corporation (MDeC) announced that the submission of original employment contracts will no longer be required for MSC status company Employment Pass applications. MSC Malaysia status companies are required to upload a copy of the contract during Stage 1 of the process. During Stage 2, companies are required to again upload a copy of the contract, this time duly affixed with a 10-ringgit revenue stamp.
BAL Analysis: Affected applicants are urged to comply with the new requirements lest they face the possibility of MDeC rejecting their applications. Contact your local BAL attorney for questions about what documentation is required or how to submit it.
What is the change? Malaysia will limit the duration of certain Employment Passes based on the foreign employee’s minimum salary.
What does the change mean? Employees working for companies under MSC status and earning less than 5000 Malaysian ringgits (about US$1390) per month will be limited to an initial two-year Employment Pass and two renewals. Also, they may no longer sponsor Dependent Passes and Social Visit Passes for family members.
Background: The new rules cap the maximum Employment Pass duration at six years (the initial two-year pass and two possible renewals of two-year durations each) for foreign workers earning less than RM 5000 per month. Previously, Employment Passes were issued initially for up to three years and could be renewed indefinitely.
Last month, we reported that the Immigration Department restricted Employment Pass holders earning less than RM 5000 from applying for new Dependent Passes for spouses or children under 18. Under the recent announcement, those employees will also be prohibited from applying for Long-Term Social Visit Passes for common-law spouses, parents or children over 18. However, restricted Employment Pass holders whose passes were approved before Dec. 31, 2014 may still apply for new Dependent or Long-Term Social Visit Passes.
Current Employment Pass holders who fall below the new salary minimum and who want to renew their family members’ Dependent or Long-Term Social Visit Passes may do so with an approval letter from the Multimedia Development Corporation (MDeC) confirming that the initial passes were approved before the restriction came into effect, and may obtain a maximum of two renewals. The duration of the renewed Dependent or Long-Term Social Visit Passes will match the duration of the sponsoring foreign worker’s Employment Pass.
BAL Analysis: The new curbs will have a negative impact for MSC status companies trying to attract foreign labor at the stated salary levels, as those workers will have to renew more frequently and will not be able to bring their family members with them.
What is the change? Malaysia has recently begun enforcing an existing rule that foreigners holding new passports take steps to transfer their employment passes and other passes to their new passports.
What does the change mean? Foreign nationals who obtain a new passport should observe “transfer of endorsement” rules to avoid delays while entering or exiting.
Background: Foreigners who obtain a new passport typically travel with both their new passport and their old passport containing their employment pass, dependent pass or other type of pass. However, holders of these passes are required to complete the transfer endorsement of them to the new passport based on immigration guidelines. Malaysian authorities are enforcing these rules because once an old passport is canceled, the pass in the old passport is assumed to be invalid. Authorities are requiring holders of employment passes and dependent passes to process the transfer of endorsement as soon as a new passport is issued.
Foreigners returning to Malaysia with old and new passports can expect immigration authorities at checkpoints to stamp their new passport with a “Report to Immigration” stamp instructing them to complete the transfer of endorsement process by a given deadline. If they fail to complete the process, they are likely to be held up at exit or entry points and stopped from traveling into or out of the country.
BAL Analysis: Foreigners should be aware of the recent enforcement measures of this rule and be sure to transfer their employment passes and dependent passes to a new passport as soon as it is issued.
IMPACT – LOW
What is the change? Employers filing their annual projections of how many foreign workers they plan to hire (FKH projections) are now required to use Malaysia’s Expatriate Services Division online portal.
What does the change mean? Employers who have not filed their FKH projections via the ESD portal will be barred from filing or renewing pass applications of any type until they do so.
Background: Beginning in March 2014, Malaysian authorities began requiring companies hiring foreign nationals to use the ESD portal. Oil, gas and energy companies were the first required to use the portal, and the program was eventually extended to other industries. Employers are now required to use the portal for almost all immigration-related filings in Malaysia.
The mandatory filling of FKH projections is not new, nor are the penalties for failure to file. The new requirement is that employers must file FKH projections using the ESD portal.
BAL Analysis: Employers should be sure to use the portal for submission of their projections in order to avoid delays in processing. Employers will not be able to have pass applications processed or renewed for their employees or their employees’ dependents until they comply with this requirement.
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.
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.
What is the change? Processing times are longer than usual for applications submitted to the immigration office in Putrajaya or to Malaysia’s Multimedia Development Corporation (MDeC) in Cyberjaya. The delays may be due in part to the holiday rush, but are also the result of general staffing limitations.
What does the change mean? Companies submitting applications should prepare for possible delays.
Background: Though the longer processing times appear, in part, due to the holidays, the delays also seem to be caused by general staffing limitations. Longer processing times should be expected until further notice.
In Putrajaya, Employment Passes are taking four to six weeks to process. Professional Visit Passes are taking two to four weeks and Dependent Passes are taking six to eight weeks. Journey Performed Visas are taking seven to 10 business days and Endorsement of Pass applications are taking five to seven business days.
In Cyberjaya, there is no change to Stage 1 of MSC status applications; application processing still takes three to five days. However, Stage 2 of MSC status applications has been delayed, taking between 14 and 21 business days to process. Stage 1 of ICT status applications is taking seven to 10 business days. Stage 2 of ICT status applications is taking 14 business days. Endorsement of Pass applications is taking three to five business days.
BAL Analysis: It is difficult to tell when the longer processing times will subside. For the time being, businesses should figure the delays into their timelines. BAL will continue to monitor processing times and will notify clients of any significant changes.