Micci president Christina Tee said the home ministry’s move had particularly affected businesses in the manufacturing, construction, plantation and agriculture sectors, which are heavily dependent on foreign workers.

“The cancellation of quotas yet to be used exacerbates the existing shortage of skilled labour in certain sectors of the economy.

“With Malaysians not being keen to work in these sectors, businesses are left without viable alternatives to staff upcoming projects,” she said in a statement.

Tee said employers would also face difficulties fulfilling contractual obligations and meeting deadlines, resulting in financial losses and operational setbacks.

She said the government should consider a dual approach to restricting foreign workers, comprising a “balanced approach” that considers regulatory objectives and business needs, and a “collaborative approach” that encourages dialogue between government agencies and industry stakeholders.

“By working together, we can develop comprehensive guidelines and processes to ensure a seamless transition in all policy changes, minimising disruptions to businesses and foreign workers,” Tee said.

Starting June 1, the government will cease allowing foreign workers into the formal sector with unused allocations.