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Advantages of Employment Pass in Malaysia

8 min read|Last Updated: August 31, 2022|
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Aside from Singapore, Malaysia has ranked as the second country within Southeast Asia for people to migrate and reside due to its tropical climate, natural treasures, robust economy, and low cost of living. While the country offers plenty of opportunities to broaden one’s cultural horizons, it also offers a good deal of employment opportunities for foreigners who wish to work and continue living here.

The employment prospects are relatively good for highly skilled foreign expatriates, given the job openings available in various industries. Although the competition for jobs is high and securing a job is seen as a challenge here, it is possible if you are highly educated with years of experience in sought-after fields.

What is an Employment Pass?

An Employment Pass (EP) is a work permit approved by the Expatriate Committee (EC) or any other relevant authorities for a foreign expat to start working with a Malaysian registered Company. Depends on the type of pass applied, an Employment Pass is subject to an employment contract up to 60 months.

Jobs Opportunities in Malaysia

In terms of Malaysia’s economy during the pandemic, it is rational to say that the job opportunities have reduced to a great extent. However, it does not mean that there are zero opportunities for those who seek to try securing a position in this country.

Instead of trying your luck once you’ve arrived in Malaysia, it is highly advisable for you to at least secure a position while you’re still in your home country. It is always better to be sent off to Malaysia as an expat by a Malaysian registered Company. This way, you are already halfway to attain the employment pass (which will be applied by your employer) and once you arrived in Malaysia, you are ready to start working.

There are several restrictions in place when it comes to the number of foreign expatriates a Malaysian registered Company can employ. These Companies are expected to only hire these foreign expatriates only if there are no qualified Malaysian to fill the position.

Malaysia’s labour force is mostly based on tertiary sector which is also known as the services sector and is followed by lucrative oil, gas, and biotechnological sectors. Some of the key industries that are normally open to hire foreign expatriate are:

  • Petroleum and natural gas
  • Electronics and semi-conductors
  • Medical technology
  • Light manufacturing
  • Pharmaceuticals
  • Palm oil
  • Timber
  • Rubber

Along with that, Malaysia also has a Critical Occupation List which highlights jobs across 10 sectors that are highly sought after. These sectors include:

  • Information and communications technology
  • Multimedia and telecommunications
  • Electrics and electronics
  • Oil, gas and energy
  • Professional services
  • Petrochemicals
  • Medical devices
  • Financial services
  • Aerospace
  • Education

Types of work permits available in Malaysia

As of 1 September 2017, all work passes are previewed by the Ministry of Home Affairs and the Immigration Department of Malaysia. The Ministry of Home Affairs has issued three (3) types of work permits available for employers to apply for their foreign workers:

  • Employment Pass
  • Temporary employment pass
  • Professional visit pass

In order for the potential foreign workers to start working in Malaysia, their application will be strictly reviewed by the relevant government agencies. The employer is also expected to abide by the rules and regulation imposed by the government by hiring these foreign workers.

Employment Pass

This type of pass is normally for foreign workers who are offered a contract with a Malaysian registered Company. It is for foreign expatriates with specific skills commonly used for the technical and managerial positions.

Within the employment pass program, there are three (3) categories:

  • Salary eligible for the pass holder is MYR 10,000 above with a contract of more than 60 months (5 years). They are allowed to bring dependants and is allowed to hire foreign domestic helper – which is subject to approval. This pass is renewable
  • Salary eligible for pass holder is MYR 5,000 and not more than MYR 10,000 with an employment contract of at least 24 months (2 years). This pass is renewable, and they’re allowed to also bring in dependants and hire foreign domestic holder
  • Salary eligible for pass holder is at least MYR 3,000 but not more than MYR 5,000 with an employment contract of at least 12 months (1 years). This pass is only renewable for at least two (2) more times. However, they are not allowed to bring in dependants or hire foreign domestic helper

Temporary Employment Pass

This pass is normally for Malaysian registered Companies who are in need of semi-skilled foreign workers in specific sectors. This pass is also known as Visitor Pass. Its validity is up to 12 months (1 years) and the employers can apply for an extension on a yearly basis for up to 10 years.

There are two types of such pass:

  • Sectors allowed – construction, plantation, agriculture, manufacturing, and services
  • Foreign domestic helpers

Professional Visit Pass

This pass is only eligible for those foreign expatriates with necessary qualifications and skills to work in Malaysia on a temporary basis of 12 months (1 years). They are to provide their services in a Malaysian registered Company on behalf of an overseas Company and is not allowed to apply for dependant’s pass.

Business Visas

In Malaysia, it does not issue any businesses visa which is common for other known countries such as Singapore where it is usable for businessmen to travel back and forth a country without obtaining visas from their home country. Hence, those required to travel for business purpose are advisable to obtain tourist visa.

All these work passes are not considered as long-term pass and they are required for renewal before the end of the validity period.

Advantages of Employment Pass

In the long run, the employment pass holder may find that the pass offers great advantages along with the ability to work and live in Malaysia. Some of the advantages are outlined below:

Employee Provident Fund (EPF) contribution

The Employee Provident Fund is a social security institution under the Ministry of Finance Malaysia which manages a mandatory retirement and savings planning schemes for all legally employed workers in Malaysia. It is regarded as one of the vital components in the country’s multi-pillar pension framework.

This scheme works in a way where a small portion of your monthly wages is put aside for pension or retirement purpose. It is compulsory for employed Malaysian citizens to contribute, and for a foreign employee, as you are legally employed with a valid employment pass, you may choose to contribute.

EPF is a great retirement-planning device as it has a guaranteed minimum dividend rate and historically generates higher returns compared to fixed deposits and saving accounts in Malaysia.

Other added benefit of the EPF contribution is that it qualifies for tax deduction by way of personal relief. Dividends generated from EPF are also exempted from tax. When you opt to contribute to EPF as foreigner, you are obligated to contribute 11 percent of your monthly remuneration to your EPF account.

Ultimately, this scheme serves to build your retirement nest egg if you are planning to reside in the country for long-term.

Entitled for SOCSO coverage scheme

The Social Security Organization (SOCSO) is a Malaysian government agency that was established to provide social security protections to Malaysian employees with accordance to the Employees’ Social Security Act, 1969.

At current, employers who hire foreign workers with valid work pass must register their employees with SOCSO and contribute to the Employment Injury Scheme.

Employers are required to contribute a small percent of the insured’s monthly wages towards this scheme, which provide protection to an employee against any accident or occupational disease arising during his or her employment as well as commuting accidents.

Eligible to apply for Residence Pass-Talent

The Residence Pass-Talent is a 10-year renewable pass for highly qualified foreign employees to continue to work and live in Malaysia. One of the main advantages of this pass is that it is tied to the individual instead of the company hiring the foreign employee. With this benefit, foreign employees will have the flexibility to change employers’ multiple times during the validity of the pass without having the need to renew it.

To acquire this pass, applicants will need to hold a valid Employment Pass, and a total work experience of 5 years, with 3 years of Malaysian working experience. This means the employment pass is your only gateway to attain this Residence Pass-Talent.

Besides that, your spouse will also be permitted to seek for employment and your family members of over 18 years old, such as parents and parents-in-law are entitled for a 5-year social visit pass.

With this pass, the government aims to attract and retain top talents in the country and subsequently help to produce better growths in the economy, thus resulting in a win-win situation for both parties.

Doorway to Permanent Residency

Foreign nationals with a valid employment pass and lived in Malaysia continuously for 5 years, may apply for a permanent resident status. Gaining this status is ultimately filing as residents can stay and remain in the country indefinitely, seek employment freely, acquire properties, own a business, and enter and exit the country similar to Malaysian citizens.

Other advantages

As soon as your Employment Pass is endorsed, you may open a bank account. You may also apply for Credit Cards from any banks in Malaysia and the criteria is similar, which is depending on your monthly income and credit history. If you have a driving license from your residence country, you can convert it to a full Malaysian driving license.

Not only limited to these benefits, but you are also entitled to other fringe benefits during your terms of employment here such as health and other insurances.

Thinking of setting up a company or would like to work in Malaysia? Reach out to us for a free consultation to see how we can support your journey!

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What are the 3 categories of the employment pass?2021-09-17T00:15:43+08:00

The 3 categories of employment pass are as follows:

Category I (EPI) – for applicants who earn a fixed monthly salary of at least RM10,000 and a valid employment contract for a minimum of 5 years.

Category II (EPII) – for applicants who earn a fixed monthly salary of at least RM5,000 up to RM9,999 and a valid employment contract of 2 years.

Category III (EPIII) – for applicants who earn a fixed monthly salary of between RM3,000 to 4,999 and a valid employment contract period not exceeding 12 months.

If my employment pass application is rejected, am I allowed to appeal the decision?2021-09-17T00:14:50+08:00

Yes, an appeal can be lodged 14 days after receiving notice of the decision for your initial application.

Can anyone from any country receive an Employment Pass?2021-09-17T00:14:08+08:00

The current regulations regarding the Employment Pass do not bar anyone from receiving one on the basis of nationality. Anyone who meets all of the relevant criteria may receive it. Therefore, any eligible person from any country may receive an Employment Pass.

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Join the discussions

  1. Rejuanul Kabir January 7, 2022 at 3:28 am - Reply

    Hi, I want to know some information about EP. If I get a employment pass category 1 what’s the benefits of this.Will my wife be able to study undergraduate or postgraduate course on this visa?

    • Paul Hype Page January 11, 2022 at 10:14 am

      Hi Rejuanul Kabir,

      After you obtain your EP, you can apply for a Dependent Pass for your wife. However, if she would like to study in Malaysia, she will need to obtain a student pass as well.

      DP holders are not allowed to study or work in the country without any other visas.

      Best Regards,

  2. Mandy Phan March 20, 2021 at 9:14 am - Reply

    Hi, I am foreign spouse with LTVP. Recently I was offered a job by international company. I would like to enquire, for my case, would it be better to get an endorsement on LTVP to work (I have renewed LTVP which is valid for 1 year for 4 times), or get an employment pass (Category I)?

  3. Lasmian January 19, 2020 at 11:38 pm - Reply

    If my EP approve my Malaysia goverment? I will have also EPF?
    I am Indonesian and now applying EP Cat 2 in Selangor company. Thks

    • Tiwiyah Kumaran January 23, 2020 at 10:31 am

      Hello Lasmian,

      If your Malaysia EP is approved, you will be able to benefit from the EPF.

      For further information on either the EP or EPF, please contact us.

      Thank you for your question.

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