Introduction

The Malaysian Ministry of Human Resources has announced that it will introduce the "1:3 Internship Policy" (hereinafter referred to as the "Policy"), effective January 15, 2025, which will require companies that have employees with work visas to have a maximum ratio of foreigners to (paid) interns of 1:3 .
This announcement does not appear to have been made public in advance, and has expressed surprise and concern among foreign companies in Malaysia, including Japanese companies.
Below we explain what we currently know about this policy.

Overview of 1:3 Internship Policy

This policy is being introduced by the Malaysian government with the aim of developing domestic human resources and promoting employment.
This policy imposes an obligation on companies that hire foreign workers to provide internship opportunities to students in Malaysia.
Through this initiative, it is hoped that students will gain practical experience and become more competitive in the labor market.
At the same time, it is said that (whether this is actually the case or not) companies will be able to use the system to discover young talent and use it for future employment, and it is said to be designed to provide an important means for students studying at domestic educational institutions to gain work experience as part of their academic requirements, while also meeting the human resources needs of industry.

Policy Background and Objectives

The background and objectives of the establishment of this policy are believed to be as follows:
In recent years, Malaysia has experienced rapid economic growth and a growing demand for highly skilled human resources. However, at the same time, it is said that a current situation is one in which many students are unable to gain sufficient practical experience to immediately enter the labor market after graduation.
In light of this situation, this policy has the following objectives:

Providing opportunities for practical experience

By providing meaningful internship opportunities to students at universities and vocational schools across the country, we will improve their job readiness after graduation.

Human resource development through cooperation with companies

By companies offering internship programs, it will strengthen collaboration between industry and educational institutions and address the skills needs of industry.

Reducing dependency on foreign workers

By requiring companies that hire foreign workers to offer internships, we will improve the skills of domestic human resources and gradually reduce dependency on foreign workers in the labor market.

Specific contents and requirements of this policy

In implementing this policy, conditions are set out that must be met by both companies and students.
Specifically:

Target companies

Malaysia Expatriate Service Centre and Malaysia Digital Economy CorporationEconomy CorporationCompanies that have obtained a foreign worker employment pass under

Cases where this policy does not apply

The following cases are exempt from this policy:
New companies operating in Malaysia for less than two years Companies with Representative or Regional Offices Companies receiving tax exemptions from the government (especially in key industry sectors such as digital and energy)
Applications for other tax exemptions may be considered by relevant committees based on feedback from the pilot phase of this policy.

Eligible students

You must be a student enrolled in a university, college or vocational school in Malaysia who is enrolled in an accredited educational institution.

Internship Requirements

Duration : Internships must last a minimum of 10 weeks.
Remuneration : Interns will be paid a minimum of RM500 per month (RM600 under certain conditions).
Accreditation : The program must be TalentCorp accredited.

Trial period and launch date

This policy will be implemented for a trial period at first, after which it will be fully implemented. Specifically, it is as follows:
Trial period: February 15, 2025 to December 31, 2025
Full-scale implementation: From 1 January 2026, during the trial period, flexible rules will be applied to make it easier for companies to adapt to the system , and the government will measure its effectiveness and make any necessary improvements.

How this policy affects you

If this policy is fully implemented, it is likely to have an impact on the students and companies that will be involved in the policy, as well as on the industry as a whole.
There seems to be some debate as to whether this impact on the industry as a whole is consistent with the goals of foreign companies, including Japanese companies, but this is thought to be the purpose of this policy.

Impact on students

Gaining work experience will greatly expand your employment opportunities after graduation.
In addition to improving on-the-job skills, this could also lead to networking and career development in the industry.

Through internship programs, companies can identify and develop future talent at an early stage.
Incentives such as tax deductions may be available.

This will promote skill improvement of domestic human resources and strengthen the competitiveness of the industry.
The dependency on foreign workers will gradually decrease, improving the sustainability of the Malaysian economy.

summary

This policy has the potential to be an important step towards human resource development and economic development in Malaysia.
By implementing this policy together with students, companies, and the government, it is believed that it will be possible to develop human resources with skills that meet the needs of the labor market and support the development of domestic industries.
On the other hand, it is important to note that for companies that employ employees who have obtained an Employment Pass (which is likely to be the case for many Japanese companies), including in terms of internship expenses, this system is unlikely to be beneficial.

Please also refer to the FAQ published regarding this policy.