Hiring an Expatriate in Malaysia: A Comprehensive Guide
Hiring an expatriate in Malaysia may appear straightforward at first glance, especially when one refers to the information available on various government websites. However, the reality is often more complex, particularly for those new to this process.While established multinational corporations (MNCs) and local companies with experience in hiring expatriates might navigate the process with relative ease, newcomers may encounter numerous challenges due to a lack of familiarity with essential prerequisites.Additionally, there is a risk of falling victim to untrustworthy agents or consultants who promise much but fail to deliver or do so at unreasonable costs.
Key Steps and Requirements for Hiring an Expatriate
- Establishing a Local Entity: The first step is to establish a local entity in Malaysia, which should be registered with either the Companies Commission of Malaysia (CCM) or the Registrar of Societies (ROS).
- Paid-Up Capital Requirements: Depending on the ownership structure, the minimum paid-up capital for companies varies:
- RM 250,000 for 100% Malaysian-owned entities
- RM 350,000 for joint ventures with a minimum of 30% foreign equity
- RM 500,000 for wholly foreign-owned companies
- RM 1,000,000 for foreign companies with more than 51% foreign equity and under the purview of the Ministry of Domestic Trade, Co-operatives and Consumerism
Minimum Salary Thresholds
Generally, the minimum salary for expatriates is set at MYR 5,000 per month. However, this can vary in specific sectors, such as those within the National Key Economic Areas (NKEA) or those with Multimedia Super Corridor (MSC) status, where lower benchmarks may apply.
Supporting Letters for Certain Sectors
Industries like construction, education, and healthcare require a supporting letter from their respective regulatory bodies before applying for an Employment Pass (EP).
Knowing Where to Apply
In Malaysia, there are ten different agencies authorized to approve expatriate applications, with the Expatriate Services Division (ESD) being the most prominent. Identifying the right agency is crucial to avoid delays.
Conclusion and Best Practices
Prior to initiating the process of hiring an expatriate, it’s essential to understand and meet all the necessary requirements. Planning ahead, preparing all required documents, and adhering to prerequisites can significantly ease the process. To focus better on business operations, companies might consider engaging reputable firms to assist with the application process, ensuring a smooth and efficient experience.
Frequently Asked Questions (FAQs)
What is the minimum paid-up capital required for a 100% foreign-owned company to hire an expatriate in Malaysia?
RM 500,000.
Can companies in the National Key Economic Areas offer a lower basic salary to expatriates than the usual benchmark?
Yes, they are allowed to offer a salary below the general benchmark of MYR 5,000 per month.
Which agency processes the majority of expatriate pass applications in Malaysia?
The Expatriate Services Division (ESD).
Is a supporting letter necessary for all sectors before applying for an Employment Pass?
No, only specific sectors like construction, education, and healthcare require it.
How many agencies are authorized to approve expatriate applications in Malaysia?
There are ten different agencies.
What is the minimum paid-up capital for a joint venture with a minimum of 30% foreign equity?
RM 350,000.
Are there different salary requirements for expatriates in the Multimedia Super Corridor (MSC) status companies?
Yes, these companies can employ expatriates at a salary below MYR 5,000 per month.
What is the first step in hiring an expatriate in Malaysia?
Establishing a locally registered entity.
What risks might companies face when hiring expatriates without proper guidance?
They may encounter legal issues, delays, or fall prey to unscrupulous agents.
Why is it beneficial to engage a reputable company for expatriate hiring?
To ensure compliance with regulations, efficiency in processing, and to focus on core business activities.
