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Companies seeking new manufacturing licences will need to demonstrate a shift towards automation and better-paying jobs, rather than continue relying on foreign workers to keep operations running.
Malaysia will not approve new manufacturing licences for businesses looking to adopt labour-intensive models that depend heavily on low-skilled foreign workers, Datuk Seri Johari Abdul Ghani, Minister of Investment, Trade and Industry has said.
The government wants new investments to bring better employment opportunities for Malaysians, including through higher wages and greater investment in automation, Datuk Seri Johari said during a parliamentary sitting on Monday (2 November 2026).
According to The Edge, he pointed to the country's pool of more than 400,000 locally trained technical graduates, questioning why manufacturers continued to depend on foreign workers despite the availability of local talent.
He made clear that companies seeking to establish operations similar to those already in the market would not be given the green light.
“Anyone who comes and asks for a new licence to do something similar to companies already operating in our country, we say no,” he told the Parliament during oral question time.
Datuk Seri Johari also outlined the government's position on foreign worker recruitment, saying businesses that approach the Ministry of Investment, Trade and Industry (MITI) or the Malaysian Investment Development Authority (MIDA) would be reminded that foreign workers should be reserved for jobs involving dirty, dangerous and difficult conditions, commonly referred to as “3D” work.
For other positions, companies should make the roles attractive enough for Malaysians through appropriate wages, he added.
His remarks came in response to Tan Hong Pin (PH-Bakri), who raised the question of whether foreign worker recruitment policies could be made more flexible to reflect the operational requirements and automation capabilities of individual industries.
According to The Edge, MP Tan highlighted manufacturers' concerns that some production processes still required manual labour, even after companies had automated their operations to the maximum extent that was commercially viable.
He also cautioned against telling businesses seeking lower labour costs to move to Indonesia or Vietnam, suggesting that such an approach could risk driving manufacturers away from Malaysia.
Datuk Seri Johari said the government was not advocating for lower-technology manufacturing operations to be relocated overseas across the board. Instead, the focus would be on helping existing industries move towards higher levels of development.
He also took issue with employers that continued to request foreign workers while offering TVET graduates starting salaries on par with low-skilled foreign labour.
Datuk Seri Johari said some employers continued to offer TVET graduates salaries comparable to those of low-skilled foreign workers, despite Malaysia having about 2.6mn foreign workers, excluding undocumented workers.
He added that some manufacturers which had been operating in the country for between 10 and 20 years had yet to move away from their reliance on foreign labour, despite the expansion of the local TVET talent pool.
Datuk Seri Johari further challenged the notion that Malaysians were unwilling to take up available jobs. He cited Malaysians travelling to Singapore for work and those turning to gig employment, saying these choices reflected where workers could find earnings that made financial sense.
He said employers should consider whether the wages they offered were sufficient to meet workers' day-to-day expenses, including accommodation.
In his statement, the minister also questioned the pay practices of profitable businesses, pointing to companies earning hundreds of millions of ringgit while remaining unwilling to pay local employees RM2,000 a month and continuing to offer starting salaries of RM1,700.
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