Malaysia to Channel Foreign Workers’ Levy into Automation Drive

The government of Malaysia is prepared to consider using funds collected from the levy on foreign worker recruitment to assist businesses in enhancing automation and productivity, aimed at reducing reliance on foreign labor. Tan Sri Johan Mahmood Merican, Secretary-General of the Ministry of Finance, shared this information. According to him, returning a portion of the levy revenue to businesses will enable them to invest in modern technology and machinery.

Mr. Johan Mahmood Merican addressed the matter during a post-Budget 2027 briefing organized by the Malaysian Economic Association (MEA). Based on reports published by Bernama and related Malaysian economic sources, the proposal to allocate levy funds toward automation is being considered as part of the government’s initiative to lower dependence on foreign workers. He stated that, in principle, the government is interested in reviewing such proposals.

Mr. Johan noted that in the past, when increases in the foreign worker levy rate were under consideration, a proposal was raised to create a fund using the additional revenues. It was intended that money from this fund would boost business productivity through investments in automation and related technological initiatives. If implemented again, such an initiative could enable enterprises to improve operational efficiency through modern technology and successfully reduce their reliance on foreign labor.

Meanwhile, according to Malaysia’s 2027 Budget, there is a plan to set the minimum monthly wage at 2,000 Ringgit starting in June 2027. Large companies will implement the increased wage first, whereas micro, small, and medium-sized enterprises (MSMEs) will be granted additional time to adapt to the new wage structure.