Expatriate employment in Malaysia falls under the following categories:

Key post: This is for high level managerial post in foreign-owned private companies and firms operating in Malaysia. These posts are essential for foreign owned companies to safeguard their business interests in Malaysia. The expatriates employed under this category are generally responsible for determining the companies’ policies, goals and objectives. Examples of posts under this category are Executive Chairman, Chief Executive Officer, Managing Director, General Manager, Technical Director, Production Manager, Project Manager, Country Manager or Factory Manager.

Executive posts: This is an intermediate level, managerial and professional posts. The posts require academic qualifications, practical experience, skills and expertise related to the respective jobs. The expatriates are responsible for implementing the company’s policies and supervision of staff. Examples of posts under this category are Marketing Manager, Logistics Manager, Quality Control Manager, Professionals such as Chief Engineer, Engineer Manager, Lecturer, Doctor, Architect, etc.

Non-executive posts: These are posts for the performance of technical jobs that require specific technical or practical skills. Examples of posts under this category are Welder, Mould Maker, Tool & Die Maker, Manufacturing System Designer, Food/Nutrient Technologist, Fashion Designer, and Specialist in Furniture Design, Heat Setting Technician, Sewing Specialist, and Craftsmen.

To employ an expatriate under any one of the above categories the following processes apply:

1) application for approval of position from six authorised agencies such as:

a) MIDA or Malaysian Industrial Development Authority,

b) MDec or Multimedia Development Corporation,

c) PSD or Public Service Department,

d) CBM or Central Bank of Malaysia,

e) SC or Securities Commission, and

f) EC or Expatriate Committee.

2) application for approval of work permits from the Immigration Department of Malaysia.

The bulk of the applications for approval goes to the EC or Expatriate Committee. Application for work permit can be submitted to any Immigration Office in Malaysia. As stated earlier, the above posts are in respect of expatriate employment in foreign-owned private companies and firms operating in Malaysia. In most cases the entities involved in providing employment are the local Sdn Bhd companies, local firms, public institutions, government bodies, operation headquarters and representative offices. Invariably the entities under which the expatriates are employed have business dealings with Malaysian residents.

Labuan IBFC Expatriate Posts:

Expatriate employment under Labuan IBFC however is different and unique in that:

1) application for approval of position is not made to any of the six authorised agencies, but to the Labuan Offshore Financial Services Authority,

2) the employment is strictly under a Labuan offshore company established under the Offshore Companies Act 1990,

3) the Labuan offshore company is prohibited from dealing with Malaysian residents,

4) the application for approval of work permit can only be made to the Department of Immigration’s Office in Labuan, and

5) once the work permit is approved, the expatriate must come personally to the Immigration Department’s Office in Labuan.

If a person is a director or officer or shareholder or employee of a Labuan company he can apply for his work permit himself and dependent passes for his dependents. Normally work permits and dependent passes are given for 2 years although it is possible to apply for longer periods to a maximum of 5 years. It is very important that the applicant’s passport and his dependents’ passports have at least two and a half years’ validity before expiry.

Applying for work permit & dependent passes

The first step an applicant needs is to establish an offshore company in Labuan, handled by a trust company. He may be the director of the Labuan offshore company and at the same time, employed by the Labuan offshore company. Once his Labuan offshore company has been incorporated, application for approval of his position can be made to LOFSA. This application can only be made for a Labuan offshore company that conducts “offshore business activities” which include consulting, trading, management, etc, done with foreign parties. He is not permitted to use the Labuan offshore company to conduct business with residents of Malaysia.

If his application is approved, LOFSA will issue a letter to the Immigration Department in Labuan recommending that a 2-year work permit and dependent passes be issued to him and his dependents. Once a recommendation has been made by LOFSA, the rest is a formality.

On the Immigration Department in Labuan’s approval, the applicant and his dependents must travel to Labuan to have their passports endorsed with the work permit and dependent passes. In most cases, this can be done in one day. There are many flights to Labuan daily and the travel time is only two and a half hours from Kuala Lumpur.

The duration to obtain a work permit is fairly short. It takes two to three days to incorporate a Labuan offshore company. LOFSA normally takes a week to approve a position and thereafter, the Immigration Department will approve a work permit or dependent pass within fourteen days. Take note that the above time frames assume that the applicant has provided the trust company with full payment and complete documentation.

Major benefits of a Labuan IBFC work permit

1) For carrying on offshore business activity, a Labuan offshore company is subjected to only 3% tax on its chargeable net profit or RM20,000 which ever is elected for. If using a local Sdn Bhd company, the tax rate is 26%.

2) tax for an offshore company is payable on the preceding year basis, i.e. payable next year whereas a local Sdn Bhd pays tax in advance,

3) A work permit for a minimum of two years and maximum of five years may be obtained,

4) It is not required to have residence in Labuan,

5) An expatriate enjoys 50% tax abatement from the salary received,

6) Director’s fee are exempted from tax

7) The Labuan offshore company may buy property in Malaysia which can either be residential or business use for its employees, directors, etc

8) Identity Card can be applied for immediately after the work permit is issued,

9) There is no need for local partners or local directors.

10) Only one director and one shareholder is required and they can be the same person and of any nationality,

11) The minimum paid up required, in most cases, is US$1.00 only,

12) RM account can be opened to pay for expenses.

Major prohibitions

• No business dealings with Malaysian residents, for example selling goods and services to Malaysian residents. All our clients under this category have business dealings only with parties outside Malaysia.

• Not allowed to trade in the local currency Ringgit. But Ringgit account can be opened to pay expenses like salary, rentals and the like.

What is required for the work permit and dependent pass?

Work permit

1. clear copy of passport of the applicant (only pages which have been stamped);
2. four copies of passport sized photographs;
3. curriculum vitae;
4. academic qualifications
5. company profile
6. contract of employment stating at least designation, monthly salary of no less than RM3000.00 and acceptance of the employment;
7. letter from the Labuan offshore company on its letterhead addressed to the Immigration Department to apply for the permit and /or passes; and
8. if available, income tax number of the applicant.

Dependent pass

1. clear copy of the passport of spouse and/or children;
2. four copies of passport sized photographs of spouse and/or children;
3. marriage certificate and/or birth certificate of children; and
4. a letter from the work permit applicant requesting dependent pass.

Fees payable to Immigration:

i) main applicant pays RM300.00 for one years plus RM50 processing fee.

ii) dependent pays RM90.00 for one year plus RM50 processing fee

iii) journey performed fee, if required is RM500.00

Verification of supporting documents

Supporting documents which are in foreign languages other than English have to be translated and authenticated by the applicant’s own embassy. Educational certificate may be certified by an officer from an embassy, officer from a trust company, notary public and lawyer. Marriage certificate MUST be certified by the Embassy only. If an applicant requires an entry visa, he needs to state a Malaysian Embassy where he will apply for the visa. Nationals from some countries may have to leave Malaysia and get their visa from the nearest Malaysian Embassy. However this can be avoided by paying “journey performed” fee of RM500.00.