Malaysian Work Permit: Essentials For Foreign Business Owners

A Malaysian work permit is a must if you plan on expanding your business there, especially for immigration compliance. For foreign business owners and entrepreneurs, securing the correct visa or work permit is a foundational requirement. It also dictates your legal ability to reside, manage operations, and generate income within the country.

This article outlines the available work permits for foreign business owners and the application process with the Expatriate Services Division (ESD). It also covers how your permit choice impacts your business incorporation, including paid-up capital and director residency requirements.

Types of Malaysian Work Permits

Choosing the right Malaysian work permit depends heavily on several factors. Among them are your intended duration of stay, your defined role, and your company’s (Sdn Bhd financial structure.

Employment Pass (EP) – The Primary Work Visa

The Employment Pass (EP) is the main work visa for foreign professionals, including company directors and senior managers. These individuals must be formally employed by a Malaysian-registered company. The application is managed through the Expatriate Services Division (ESD) portal.

EP Category I (Executive Level):

• Minimum Gross Salary: RM10,000 and above per month.
• Validity: Up to five years, renewable.
• Target Role: Top management, directors, or highly specialized skills. The role requires a university degree and a minimum of five years of relevant experience.

EP Category II (Professional Level):

• Minimum Gross Salary: RM5,000 to RM9,999 per month.
• Validity: Up to two years, renewable.
• Target Role: Mid-level managerial and professional roles, requiring a recognized degree, diploma, or technical qualification.

EP for Founders and Directors (DIPO Status)

The Director/Investor/Partner/Owner (DIPO) status is a classification that qualifies a person for the Employment Pass. This status is vital for foreign individuals who hold a leadership position and significant shares in the sponsoring company.

• Significance: EP holders with DIPO status can legally satisfy the mandatory requirement under the Companies Act 2016. This requires having at least one “ordinarily resident” director in the company.
• Company Sponsorship: EP approval is entirely contingent on the company meeting necessary regulatory requirements, particularly paid-up capital thresholds.

Dependent Pass (DP)

The Dependent Pass (DP) is issued to the spouse and unmarried children (under 21 years old) of an Employment Pass (Category I and II) holder.

• Work Eligibility: Dependents of EP Category I holders are eligible to apply for an endorsement. This allows them to seek and secure employment in Malaysia, subject to obtaining the relevant permission from the Malaysian Immigration Department.

Professional Visit Pass (PVP)

The PVP is a temporary entry pass for foreign experts undertaking specific short-term assignments with a Malaysian entity. Examples include training, installation, or machinery setup. It is strictly not a work permit.

• Validity and Restrictions: It is valid for up to 12 months and is generally non-renewable. The PVP holder cannot be paid a salary by the Malaysian company; income must be derived from a foreign entity.

Other Specialised Malaysian Work Permits

Key Considerations for Foreign Business Owners

Corporate registration compliance points are the most significant obstacles for foreign entrepreneurs. These points are prerequisites for EP approval.

Mandatory Paid-Up Capital Requirements

The Malaysian Immigration Department and MIDA set minimum paid-up capital requirements for Sdn Bhd companies. This is done to demonstrate genuine investment and the ability to sponsor foreign talent.

The Critical Wholesale, Retail, and Trade (WRT) License

If your Malaysian company engages in Wholesale, Retail, or Trade (including e-commerce, distribution, restaurants, and import/export) and has more than 50% foreign equity, applying for the WRT License from the Ministry of Domestic Trade and Cost of Living (KPDN) is MANDATORY.

• Impact on EP: The company cannot legally register with the ESD without a valid WRT License (or KPDN exemption letter). As a result, the company cannot sponsor an Employment Pass.

Local Director and Residency Mandate

According to the Companies Act 2016 (administered by SSM), every Malaysian company (Sdn Bhd) must have at least one director who is “ordinarily resident” in Malaysia.

• This director must reside in Malaysia primarily by holding an Employment Pass, Permanent Residency, or by being a Malaysian citizen. The EP (DIPO status) allows the foreign founder to fulfill this role.

Steps to Obtain Your Malaysian Work Permit

The application flow strictly follows the ESD’s procedures and it begins only after the company is fully compliant.

Step 1: Corporate Compliance and ESD Registration

1. Company Incorporation: Establish Sdn Bhd with the Companies Commission of Malaysia (SSM).
2. Paid-Up Capital: Inject and verify the minimum required paid-up capital.
3. WRT Compliance: Secure the WRT License from KPDN (if applicable).
4. ESD Registration: The company registers on the Expatriate Services Division (ESD) online portal.

Step 2: EP Application Submission

1. The company submits the required position quota and then the Employment Pass application for the specific foreign individual via the ESD portal.
2. The submission must include the individual’s certified qualifications, passport, employment contract, and a robust justification for hiring the foreign talent.

Step 3: Approval and Endorsement

• Processing Time: The official processing standard is 10 working days. However, actual processing times often take 4 to 8 weeks due to potential requests for clarification or additional documents.
• Final Approval: Upon approval, an Approval Letter is issued. The applicant must then present their passport at the Malaysian Immigration Department to receive the physical Endorsement Sticker, which confirms the pass’s validity.

Renewal and Compliance

EP renewals must be submitted through the ESD portal 3 months before the current pass expires. Renewal is conditional on the company maintaining its financial health (as proven by Audited Financial Statements) and demonstrating continuous tax and regulatory compliance.

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