Home minister Saifuddin Nasution Ismail said on Tuesday that the government had decided to reopen applications for foreign worker quotas, but only for agriculture, plantation and mining and their related subsectors, on a “case-by-case” basis.
In a statement, FMM said that foreign worker shortages were not confined to these three sectors.
“They are widespread across almost all industries … manufacturing, construction, and plantation rely the most on foreign labour,” said FMM president Soh Thian Lai.
“Within manufacturing, subsectors such as furniture, rubber products, food processing, and electrical and electronics support services face the most urgent manpower needs.”
He also cautioned that excluding existing manufacturers from quota approvals risked undermining production continuity, deterring investments, and weakening Malaysia’s global supply chain position, saying only manufacturing businesses involving new investments under the Malaysian Investment Development Authority would be allowed to apply for quotas.
Soh noted that the manufacturing sector grew 3.7% in the second quarter of 2025, and manufacturing exports increased 5.2% to RM656.56 billion in the first half of the year due to existing manufacturers expanding their capacity.
He said that surveys among FMM members had found that labour shortages were threatening business growth and long-term viability, with many companies struggling to replace workers whose contracts had ended.
Acknowledging the government’s target under the 13th Malaysia Plan to reduce reliance on foreign workers from 15% to 10% by 2026, FMM nevertheless said the transition must be gradual.
“A sudden reduction risks worsening shortages,” he said, pointing to Singapore’s phased, sectoral approach as a possible model.
Soh also warned of cost implications if foreign worker supply was restricted, citing higher operating expenses, delayed projects, and reduced output.
He said while businesses had raised wages, offered benefits, and introduced incentives to attract locals, many Malaysians remained reluctant to take up labour-intensive jobs due to wage expectations, job perceptions, and working conditions.
Soh also said that employing foreign workers was neither cheap nor easy considering the rising recruitment costs, uncertainty on policies, and the need for compliance with stringent ESG and international certification standards.
“The balance is crucial. Protecting local employment is important, but industries must also have timely access to foreign workers in jobs where locals are unwilling,” he said.
“Malaysia’s manufacturing sector remains a vital engine of growth. To sustain this momentum, the government must adopt a balanced, transparent, and inclusive approach to foreign worker management that supports both new and existing investors.”