Malaysia has been actively reshaping its workforce planning strategy by reducing reliance on foreign labour while promoting local employment opportunities. Under the Twelfth Malaysia Plan (12MP), the government has set a cap restricting foreign workers to no more than 15% of the national workforce as part of a long-term strategy to enhance local employment participation. This policy aligns with broader goals under the Thirteenth Malaysia Plan (13MP), which aims to lower the foreign workforce share further — targeting 10% by 2030 and 5% by 2035.
As of mid-October 2025, the number of legally registered foreign workers fell to approximately 2.13 million, representing a 13% decline compared with the previous year. This drop reflects the outcomes of the current cap and related recruitment controls.
Implications for Workforce Planning
For Malaysian employers, navigating the “15% ceiling” requires strategic workforce planning that balances the ongoing
need for foreign labour with long-term goals for local hiring. Key considerations include:
• Reviewing current foreign worker quotas and forecasting future staffing needs.
• Upskilling local talent through technical and vocational education programmes to reduce dependency on migrant workers.
• Optimising labour productivity with digital HR tools and workforce analytics.
• Malaysian authorities have also maintained a freeze on new foreign worker quota approvals since March 2023 and plan to introduce a multi-tier
levy system by 2026 to further incentivise hiring local workers in semi-skilled and skilled roles.
What Employers Should Do
Employers are encouraged to integrate strategic workforce planning into their HR operations, including creating robust succession pipelines,
engaging with employee training partners, and tapping into government incentives for local recruitment. Kainan Sdn Bhd can support businesses
by providing workforce analytics, foreign worker quota management, and local talent integration solutions to adapt to evolving regulatory environments.
References:
(https://sea.peoplemattersglobal.com/news/workforce-planning/malaysia-cuts-foreign-workforce-by-13percent-as-push-for-local-hiring-gains-traction-47064 )
(https://www.scoop.my/news/273270/foreign-workforce-drops-13-as-malaysia-pushes-local-hiring/ )
Copyright © 2025 KAINAN SDN BHD. All Rights Reserved.