Malaysia a magnet for expats - MIDA | Malaysian Investment Development Authority
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Malaysia a magnet for expats

Malaysia a magnet for expats

10 May 2024

Malaysia has become a magnet for skilled foreign professionals, with the number of expatriates entering the country surpassing pre-pandemic levels.

According to the Immigration Department’s data, a total of 154,155 expatriate passes were issued last year – the highest since 2018.

As of March, the department has issued a total of 38,197 passes – compared with the 32,947 passes given out during the same period last year.

Malaysian Employers Federation president Datuk Dr Syed Hussain Syed Husman said employers are often forced to hire foreign professionals due to the mismatch in locals’ skills and competencies with the requirements of certain jobs.

There is a need for specific expertise in sectors such as aerospace, manufacturing (food processing) and construction. These sectors require expertise in emerging technologies such as machine learning, automation and data analytics.

“The aerospace industry, for instance, demands highly specialised skills, expertise and experience in aerospace engineering, aircraft maintenance and related fields.

“However, Malaysia faces stiff competition for skilled and experienced workers from neighbouring countries.

“Employers in Malaysia struggle to recruit and retain talent in the aerospace industry, leading to gaps in the workforce and challenges in meeting industry demands,” he said when contacted.

An expatriate is a skilled professional, who is a non-citizen or a permanent resident who is allowed to work in Malaysia on a contract or temporary basis.

Due to skill gaps among the local workforce, Syed Hussain said employers are favouring expatriates over local talents.

“The upward trend in expatriate hires over the years can be attributed to various factors.

“One reason is the real lack of locals especially for new and emerging technologies.

“Higher learning institutes need to ensure that the programmes they offer are meeting the latest and emerging skills required by the labour market,” he said.

Malaysian Trades Union Congress president Mohd Effendy Abdul Ghani said companies will only employ overseas workers if they fail to find suitable candidates for highly skilled positions.

“In fact, companies often prioritise hiring locally to avoid issues related to work permits, cultural integration and potential language barriers,” he said.

The Statistics Department’s 2023 fourth quarter report revealed that Malaysian labour share in the skilled category only amounted to 25% of the total filled jobs.

The report showed that the majority of local talents were in the semi-skilled category with over 62.7% cumulatively.

Sunway University economics professor Dr Yeah Kim Leng said it is encouraging that the number of expatriates in the country is on the uptick after experiencing a decline over the last few decades.

“The decline has been reflective of falling foreign investment in the country as well as increased use of Malaysians in running the foreign-owned operations due to lower cost,” he said.

“The rise in the number of expatriates is a good indicator that affirms the surge in foreign investment over the past two years.”

It is also positive to the economy in terms of business confidence, domestic spending and investment, especially in the high-end property, automotive and durable goods markets in addition to domestic tourism, education and other household services.

He said expatriates are typically brought in to manage critical operations, train local employees and transfer their knowledge.

“With more high-value foreign investments, the expatriates play an important role in stemming the brain drain problem by training Malaysians and providing career enhancement opportunities,” he said.

He said they may also contribute to the economy by renting high-end properties.

“The weak ringgit enhances the purchasing power of expatriates who are paid in the currencies of their home countries,” he said.

Besides contributing in direct and indirect taxes, their daily consumption and spending power will boost local products.

Economist Dr Geoffrey William said there is no dearth of local talent in the high-skilled workforce.

“There is no lack of local talent in the local professional and high-skilled workforce; the problem is lack of jobs,” he said.

“Malaysia has an underemployment of around two million people with qualifications higher than the jobs they are doing.”

Source: The Star