Malaysia to Cut Reliance on Foreign Workers to 10% by 2030 Under 13MP – Key Details Explained

In a significant policy change under the 13th Malaysia Plan (13MP), the government has set a target to decrease the dependency on foreign workers from 15% to 10% by the year 2030. This latest announcement came from the Prime Minister Datuk Seri Anwar Ibrahim during the tabling of the 13MP, in an effort to further a strategic agenda for labour market reform, promoting the automation of certain sectors and identifying better employment opportunities for local workers.

Why Is Malaysia Reducing Foreign Worker Dependence?

The government wants to address the triple challenges of low wages, low productivity and too much dependency on semi-skilled foreign labour. One of the main instruments of this transition is through the Multi-Tiered Levy Mechanism (MTLM) which will be fully implemented in 2026. The MTLM will reward companies that engage in local hiring or automating their companies while imposing a higher levy on those that continue to use foreign manpower. 

Given the labour intensive sectors, and in particular, “3D” jobs (i.e. dirty, dangerous and difficult), the sector will continue to be reviewed against certain criteria.

What Are the Key Measures Under 13MP?

The proceeds of the MTLM will be placed into a trust fund to promote automation and mechanisation.

The rules for foreign worker passes will be tightened: more stringent eligibility requirements, shorter permitted duration of employment and limited sectoral movement.

A clearing house will be established to match foreign worker applications with participants in local apprenticeship and training programs.

Further means include wage alignment, labour supply demand matching and increasing the participation of older workers, women and people with disabilities.