PETALING JAYA: The new expatriate employment policy, which sets higher minimum salary thresholds for foreign professionals, could trigger a rise in wage expectations among local workers, human resources experts warn, even as employers continue to base salaries on productivity, experience and business needs.
Association of Employment Agencies Malaysia president Datuk Foo Yong Hooi said the move may create a “domino effect” on how local employees perceive their own pay.
“When expatriates are paid higher minimum salaries, local workers will naturally ask why they cannot earn the same.”
He, however, said Malaysian companies only hire expatriates when necessary and generally prioritise local talent to manage costs.
“If companies can find suitable local talent, they will hire locals. No business will bring in expatriates without strong justification. Accommodating expatriates involves housing, relocation and other allowances, as well as visa costs.”
He warned that raising salary benchmarks could place additional financial pressure on firms that genuinely need specialised expertise.
Universiti Malaysia Kelantan human resource expert Prof Dr Balakrishnan Parasuraman said local professionals should receive competitive pay if they possess skills comparable with expatriates.
“If expatriates are paid more simply because they are foreigners, while locals with similar expertise are paid less, Malaysian professionals will continue to migrate overseas.”
He added that expatriates should only be hired for critical roles where local expertise is unavailable and employers should avoid creating pay disparities that disadvantage Malaysians.
“Local experts must be paid equivalently to expatriates if they carry the same responsibilities, especially with the rising cost of living among professionals these days. Otherwise, we will lose our talent to countries like Dubai and Singapore.”
He said multinational companies relying on expatriates and local workers to maintain operational standards and wage imbalances could affect long-term talent retention.
Separately, the Malaysian Employers Federation (MEF) cautioned that Malaysia is not yet ready to replace expatriates entirely in senior or highly specialised roles without affecting productivity.
MEF president Datuk Dr Syed Hussain Syed Husman said the country is “not yet fully prepared to replace expatriates in senior and highly specialised roles without some short to medium-term impact on productivity and service quality”.
“The main challenge lies in the depth of experience required for niche positions. In senior and frontier areas such as advanced engineering, digital transformation, specialised finance, energy transition and high-end manufacturing, the local talent pipeline remains uneven and insufficient in scale,” he said, adding that many expatriates currently hold positions requiring extensive regional and sector-specific exposure.
