Samenta urges Putrajaya to review new employment pass rules, says SMEs priced out of global talent

KUALA LUMPUR, July 15 — The Small and Medium Enterprises Association of Malaysia (Samenta) today urged the government to review new Employment Pass (EP) rules, warning that sharply higher salary thresholds for expatriates could undermine small and medium enterprises’ (SMEs) efforts to modernise and move up the value chain.

In a statement, the association said the policy, which came into effect on June 1, was implemented despite objections from industry groups and with limited consultation, particularly with SMEs that would be most affected.

Under the revised policy, the minimum monthly salary for Category I Employment Pass holders has doubled to RM10,000 from RM5,000 previously, while the threshold for Category II has risen to RM20,000 from RM10,000.

Samenta president Datuk William Ng said the new requirements would make it harder for SMEs to recruit the specialised foreign talent needed to support digital transformation, automation and innovation.

He said many of the positions required by SMEs, including software developers, data engineers, robotics technicians and cybersecurity specialists, are listed under TalentCorp’s Critical Occupations List because of limited local availability.

According to Samenta, local professionals with such expertise are often recruited by multinational corporations and larger local companies, leaving SMEs unable to compete for talent.

The association said this talent shortage has been one of the key reasons many SMEs have struggled to move beyond low-value manufacturing and services despite years of government support.

Samenta also criticised the introduction of maximum employment pass tenures of 10 years for Categories I and II, and five years for Category III, saying the limits could discourage experienced foreign professionals from building long-term careers in Malaysia.

It argued that the policy could make Malaysia less attractive to foreign investors and regional headquarters at a time when countries are competing globally for skilled workers.

Samenta called on the Home Ministry to suspend the blanket implementation of the policy and begin consultations with industry stakeholders.

Among its proposals are exempting existing Employment Pass holders from the new salary and renewal requirements, introducing lower salary thresholds for SMEs with verified business transformation plans, and aligning salary requirements with TalentCorp’s Critical Occupations List instead of imposing uniform industry-wide thresholds.

The association also urged the government to establish a transparent pathway to permanent residency for highly skilled foreign professionals to help attract and retain global talent.

“The government’s left hand must know what its right hand is doing. If we truly want our SMEs to champion the high-income, high-tech economy of tomorrow, then do not deny us the global human capital we require today,” Ng said.