Malaysia is making it easier for expats' spouses to work. Will that help retain foreign talent?

KUALA LUMPUR: Joshua Webley has seen some expatriate families’ carefully planned move to Malaysia crumble within months.

Webley, who is from the United Kingdom and has lived and worked in Kuala Lumpur for more than three years, helps expats relocate to Malaysia and navigate life in the country.

According to Webley, some expat families leave after just three months because a "trailing spouse" - the spouse of an expat with a job offer in Malaysia - could not find work in Malaysia despite having successful careers abroad.

“They can have every box ticked,” he told CNA, referring to how these families might have settled issues like moving their belongings and pets, and finding property and schools in Malaysia.

“But as soon as it comes to the point where life actually settles down and they realise that they can't find jobs, they've been leaving.”

This is what Malaysia is trying to change in a bid to attract and retain talent.

In his budget speech in October, Prime Minister Anwar Ibrahim announced that spouses of expatriates holding a Category 1 employment pass will be allowed to work in Malaysia from Jan 1, 2027, subject to conditions.

Expats must earn at least RM20,000 (US$4,900) a month to qualify for a Category 1 employment pass, the highest in Malaysia’s three-tier expat visa scheme.

Currently, expatriates' spouses who wish to work in Malaysia generally need an employer to sponsor a separate employment pass, requiring them to give up their dependant pass.

The new policy is expected to allow eligible spouses to work while retaining their dependant pass, although the government has yet to announce the full terms and conditions.

Anwar said the upcoming work provision for spouses is aimed at ensuring Malaysia “remains an attractive destination for top talent without requiring their spouses to sacrifice their careers”.

It is part of his administration’s push to attract investment and move Malaysia from being a relatively low-cost manufacturing and services hub to a high-value, innovation-driven economy.

According to a 2024 JobStreet report, Malaysia ranked 21st globally and second in Southeast Asia, behind Singapore, as a preferred work destination for international talent.

Arulkumar Singaraveloo, chief executive officer of the Malaysia HR Forum, which trains human resource professionals, said concerns about employment for trailing spouses go beyond losing a second income.

“It includes professional identity, financial independence and the difficulty of returning to employment after a prolonged career break,” he told CNA.

"(The move to allow spouses to work) should improve Malaysia’s appeal, particularly among couples where both partners have professional careers."

The Malaysian Employers' Federation (MEF) called the move a “positive step” towards making Malaysia a more attractive destination for international talent, including specialists whose expertise is important for investment and economic growth.

"Allowing eligible spouses to work will help employers attract and retain international talent, while reducing the personal and financial sacrifices associated with relocating to Malaysia,” MEF president Nik Mustapha Nik Mohamed told CNA.

WILL IT HURT LOCAL JOBS?

But Malaysia-based economist Geoffrey Williams feels allowing spouses to work is merely a "minor adjustment" to the current expat visa scheme.

"The main concerns for expatriates are the length of visas and the criteria to obtain long-term visas or residence,” the director of Williams Business Consultancy told CNA.

“These are not only difficult but they are becoming more difficult and uncertain. This uncertainty makes Malaysia unattractive to anyone looking for a long-term stay, to build a career or to build a family life.”

In January, the government said it would raise minimum salaries for expats across all three categories of employment passes, and mandate “succession plans” for those in Category 2 and 3 to transfer knowledge and expertise to local employees.

The measures, which took effect in June, had raised concerns among the expat community in Malaysia about how employers would respond and their long-term future in the country.

While Arulkumar of the Malaysia HR Forum said the higher salary thresholds signalled that employers should have a “strong business justification” for recruiting internationally, the provision for spouses addressed a different issue.

“Once Malaysia wants to attract a particular professional, can that person’s family build a workable life here?” he said.

“In that sense, the government is raising expectations of expatriate employment while improving the conditions for attracting and retaining the talent it seeks.”

Nik Mustapha urged the government to explain how the provision for spouses will complement the existing expatriate employment framework, including its emphasis on developing local talent and succession planning.

"Where a spouse fills a role requiring specialised expertise, the employer should be encouraged to facilitate knowledge-sharing, mentoring and skills development for Malaysian employees where commercially appropriate,” he said.

Webley, the UK expat, expects these spouses to also be subjected to minimum salary thresholds so local jobs are protected.

“So, it doesn't necessarily mean that they can just walk into jobs. They've still got to go into specialist jobs,” said Webley, who manages a community called Expats Club Malaysia with more than 36,000 members.

DETAILS TO BE IRONED OUT

That said, Arulkumar stressed that work permission is only the first step.

“Its effectiveness will depend on whether spouses can find suitable employment and whether the approval process is straightforward,” he said.

“Depending on their qualifications and the eventual conditions, potential opportunities could include technology, engineering, finance, regional business operations, professional services and international education.”

The MEF hopes the government will provide clear, practical and employer-friendly implementation guidelines well before the policy takes effect.

“The application process should be simple, transparent and predictable,” Nik Mustapha said.

“The authorities should clarify whether eligible spouses can work through an endorsement on their existing dependant pass, whether a separate work authorisation is required, and whether approval must be obtained for each employer or position."

Webley noted that with the change, spouses would likely not have to go through the arduous process of finding employers who are willing to cancel their dependant pass before sponsoring a separate employment pass.

“It doesn't necessarily mean that every single spouse is now going to be employed … but it is going to move a lot of barriers,” he said, calling for HR departments to be trained on handling the new policy.

STANDING OUT

For instance, a recruiter who has helped companies hire executives across Southeast Asia recounted how an expat had previously turned down a role in Malaysia because of employment restrictions on the trailing spouse.

With the latest change, the expat - who works for a German firm with regional operations in Kuala Lumpur - is considering Malaysia again, said Alex Berghofen, a managing partner at HR consultancy contagi.

“They have children and see Malaysia as offering more flexibility at this stage of their lives,” he told CNA.

Berghofen feels the move could make Malaysia “one of the most attractive destinations” in the region for dual-career expat couples.

Singapore already allows spouses of expats holding the Overseas Networks & Expertise Pass to work, he pointed out.

But to qualify for this pass through the employment category, expats must earn at least S$30,000 a month, “much higher” than Malaysia's minimum salary requirement for its Category 1 employment pass, he said.

“If Malaysia makes its process simpler, that would give Singapore a run for its money,” Berghofen wrote about the move in a separate post on LinkedIn.

“And with more jobs moving to Malaysia, this could be a game changer.”

Webley said Malaysia might have a regional edge as Thailand has recently tried to curb unauthorised business activities, illegal employment and overstays, while Singapore has a higher cost of living.

Furthermore, he highlighted that Malaysia will also extend digital nomad visa validities, allowing more high-earners to get a real taste of the country with a view of transitioning to other longer-term visas.

Anwar said at his budget speech that holders of the DE Rantau Nomad Pass who have reached the two-year limit will be allowed to stay and work remotely in Malaysia for an additional two years, subject to conditions.

"Malaysia is already on the map when it comes to attracting global talent, anyway,” Webley said.

“But this will help make that final decision for families who are sitting down and looking at a piece of paper, comparing three different countries."

Arulkumar from the Malaysia HR Forum said these changes should be seen as improving Malaysia’s competitiveness, rather than automatically giving it an advantage over neighbouring countries.

“Malaysia is competing in a region where other countries are also adapting their offers,” he added.

“Malaysia should compete on the overall package: Career opportunities, living costs, education, healthcare, connectivity and a welcoming environment for families.”

Source: CNA/hz