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Rethinking Talent Strategy: Malaysia’s New EP Salary Thresholds Signal a Shift Toward High-Value Knowledge Workers

January 13, 2026
Malaysia’s Ministry of Home Affairs (KDN) has announced a significant revision to the minimum salary requirements for Employment Pass (EP) Categories I, II, and III, effective 1 June 2026. This move marks a pivotal shift in the country’s approach to foreign talent—one that prioritizes high-value expertise, strategic workforce planning, and long-term economic competitiveness.

What's Changing?

At present, this change applies to Employment Pass (EP) applications submitted through MDEC. It is, however, expected to be extended to all EP applications, including those processed via the Expatriate Services Division (ESD), in the near future.
The revised salary thresholds are as follows:

EP Category Current Minimum Salary Revised Minimum Salary
(Effective 1 June 2026)
I RM10,000 and above RM20,000 and above
II RM5,000 – RM9,999 RM10,000 – RM19,999
III RM3,000 – RM4,999 RM5,000 – RM9,999
This doubling of salary floors across all categories sends a clear message: Malaysia is recalibrating its foreign workforce policy to attract and retain top-tier professionals who can contribute meaningfully to national development.

What does this mean to you as an Employer?

The new salary requirements will affect both new and renewal EP applications. Companies must act now to:

  1. Adjust compensation packages to meet compliance : Effective 1 June 2026, it is mandatory to comply with the revised salary requirements. The minimum basic salary requirement to hire a FKW will be raised from RM3,000 to RM5,000 where basic salary less than RM5,000 will no longer be eligible to apply for EP anymore.
  2. Audit current EP holders and assess renewal risks : This change also applies to renewal applications where if currently your FKW’s basic salary is less than RM5,000, his/her salary will need to be adjusted to meet the minimum salary requirement, or the FKW will no longer be eligible to be on EP anymore.
  3. Revisit workforce planning models to ensure continuity and competitiveness : As salary requirements for each of the EP category has been raised as well, it could mean that depending on where the FKW’s salary band is, his/her EP Category may be reclassified to a lower category.

Navigating the Change Now

New Applications

  • We advise that you review and align your hiring plans for foreign talents in accordance with the stipulated timeline.

Renewal Applications

  • For current EP holders with validity up to 31 August 2026, it is possible to start and complete the renewal applications by 31 May 2026.
  • For current EP holders with validity beyond 31 August 2026, adherence to the revised salary requirements is mandatory. Where applicable, appropriate adjustments may need to be made to your hiring budgets.
  • For current EP holders in Category II, do note that without salary adjustment, subsequent renewal applications will be reclassified to Category III, which attracts stricter conditions;
    a. Employment tenure is limited to a maximum of 12 months
    b. Family sponsorship is not permitted — EP III holders are ineligible to apply for Dependant Passes or Long-Term Social Visit Passes for family members
    c. Renewal is capped at 2 times, maximum under this EP Category.
    Note: The above may subject to change as the requirement change has just been introduced. There may (or may not) be a possibility of some sort of relaxation given the increase of the salary threshold. We will continue to keep our clients updated.

From Cost Efficiency to Capability Building

For years, Malaysia’s EP framework has enabled companies to tap into global talent pools, often with a focus on cost-effective staffing. The new thresholds challenge this paradigm. Employers must now justify foreign hires not just on affordability, but on strategic value—technical depth, leadership potential, and alignment with national priorities such as digital transformation, sustainability, and regional integration.

As June 2026 approaches, we now have a short window to rethink how to attract, retain, and grow talent in Malaysia. Those who prepare early will not only avoid disruption but also gain a competitive edge in building resilient, future ready teams.

Feel free to contact us

If you have plans hire or renew FKW EP applications, feel free to reach out to us today to explore how we can help you navigate these changes and strengthen your workforce planning strategy.

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