KUALA LUMPUR - Malaysia is planning to reduce its reliance on foreign workers through new visa rules that could reshape the country’s labour market, said the Prime Minister, Datuk Seri Anwar Ibrahim.

Starting in June, the government will raise the minimum salary requirement for foreign work visas across several categories.

For some categories, the threshold will increase from RM10,000 to RM20,000 per month, while others will rise from RM5,000 to RM10,000 and from RM3,000 to RM5,000.

Employers will also be limited to sponsoring foreign workers for a fixed period of between five and ten years, depending on the type of permit.

The move is part of a broader plan to reduce the share of foreign workers from 14.1%  in 2024 to 5% by 2035.

The government aims to create more job opportunities for Malaysians and raise average wages, which are currently about USD700 per month.

Malaysia currently has about 2.1 million registered foreign workers, mostly in low-paying jobs close to the minimum wage of RM1,700 per month.

In addition, around 140,000 highly skilled foreign workers are employed in sectors such as finance, technology, semiconductors and energy.

Data from the Home Affairs Ministry shows that these skilled workers contribute about RM75 billion annually to the economy and generate around RM100 million in tax revenue.

The government said reliance on low-skilled foreign labour has slowed productivity and innovation while creating wage distortions and a labour market focused on low-value jobs.

The new rules will affect both low- and high-skilled foreign workers to ensure their roles genuinely complements and supports the development of local talent.

Companies may face higher costs due to rising wages and will need to prepare to replace foreign workers with local employees when permits expire.

This transition will require businesses to invest more in training and skills development for local workers.

Analysts said Malaysia’s main challenge is building a skilled workforce, warning that without stronger education and training systems, the policy could lead to labour shortages instead of higher local employment.