KUALA LUMPUR - The Malaysian Association of Employment Agencies (PAPA) voiced serious concern over the growing difficulties businesses face in applying for foreign worker quotas since applications reopened in October 2025.

The association said it had received a sharp rise in enquiries from various industries seeking clarity on the application process and reporting obstacles at almost every stage.

Common issues raised include employers being unable to meet housing requirements under Act 446, challenges in securing the required support letters under Section 60K, interview officers not approving quotas according to set ratios, and sector-specific restrictions.

"Foreign worker applications were frozen on March 18, 2023, before reopening on a case-by-case basis in October this year. 

“During the early reopening stage, the requirements were inconsistent and frequently amended, causing major uncertainty and operational difficulties for businesses," PAPA said in a statement.

The association noted that many states no longer permit low-cost housing, affordable housing, or public housing (PPR) to be utilised as worker accommodation.

It added that the limited availability of Centralised Labour Quarters (CLQ) and Temporary Labour Quarters (TLQ), particularly in the Klang Valley, has further complicated efforts to ensure compliance.

PAPA noted that applications to convert shop lots into worker hostels involve high fees and long processing times, sometimes taking more than a year which makes it difficult for small and medium enterprises (SMEs) to meet legal requirements.

The group said it had formally raised these concerns in a letter to Human Resources Minister Steven Sim and had also met with the Human Resources Ministry’s Policy Division (KESUMA) to provide constructive feedback.

To address the situation, PAPA proposed a more flexible approach by allowing employers who are unable to fully comply with Act 446 to sign a Letter of Undertaking and place a security deposit with the ministry.

The association said this approach would ensure businesses do not immediately lose access to foreign worker quotas, protecting their operations while still allowing the authorities to enforce housing standards strictly.

PAPA also expressed concern over ongoing restrictions affecting the manufacturing and construction sectors, saying no companies in these industries have been granted quotas since March 2023, except for limited approvals in the plantation sector.

The association urged KESUMA and the Home Ministry (KDN) to balance practical business needs with ministerial KPIs and to prioritise labour policies that are predictable and fair.

"Balanced, fair, and predictable labour policies are essential to protect Malaysia’s economic resilience, safeguard worker welfare, and support sustainable business operations," PAPA said.