Malaysia’s plan to reduce the proportion of foreign workers in its labor force is drawing concern from employers who warn the policy could undermine key industries and raise costs. The government aims to lower the share of foreign labor from 15 percent to 10 percent by 2026, with officials arguing that the move will lift wages for Malaysians and enhance productivity.
For decades, foreign workers—primarily from Bangladesh, Indonesia, and Nepal—have fueled Malaysia’s industrial growth. But their presence has also triggered social unease, encouraged the growth of an underground labor market, and slowed investment in automation and higher-value technologies.
Home Minister Saifuddin Nasution confirmed that the cabinet has endorsed the policy, adding that a committee will soon determine sector-specific quotas under the economic ministry’s guidance. The framework is expected to be finalized by the first or second quarter of next year.
Currently, foreign workers make up about 15 percent of Malaysia’s workforce, translating to nearly 2.5 million people employed in manufacturing, construction, agriculture, and food services. Industry players caution that cutting this number too quickly could disrupt operations and inflate costs across critical sectors.
