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Working in Kuala Lumpur
Find out how to get a job and work in Kuala Lumpur
There are a lot of advantages to working in Kuala Lumpur, Malaysia’s only global city and its center for international business. On InterNations GO!, you’ll find the information you need, concerning work permits for expats, income tax, and social security in Kuala Lumpur.
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Employment in Kuala Lumpur
Most people working in Kuala Lumpur are employed in the city’s fast-growing service sector. As the economic and business center of the country, Kuala Lumpur attracts not only Malaysians. Plenty of expats can be found in Kuala Lumpur as well, and foreign residents make up 9% of the people living in the city.
The city’s well-developed infrastructure makes working in Kuala Lumpur a pleasant experience: Many multinational companies choose to open their regional headquarters here.
Kuala Lumpur’s Biggest Economic Sector
The tertiary sector employs 83% of the workforce of Kuala Lumpur. Most of them are working in the finance, insurance, and real estate industry. However, tourism-related business as well as wholesale and retail trade also contributes significantly to providing job opportunities.
Transport, storage, communication, education, and health services are the other major players when it comes to creating jobs in Malaysia. It’s not only business and personal service providers working in Kuala Lumpur: Government services also play a big role on the economic stage.
Despite the relocation of Malaysia’s federal government administration to Putrajaya, many government institutions have remained in Kuala Lumpur. Most foreign diplomats and civil servants are still working in Kuala Lumpur, too.
Malaysia’s Financial Center
Many people employed in Kuala Lumpur’s service sector are specialized in finance. In fact, this city has become one of the global Islamic financing hubs in recent years. This is reflected in the strong presence of financial institutions from the Gulf region and representatives of Dow Jones & Company working in Kuala Lumpur’s stock exchange, the Bursa Malaysia, in order to set up Islamic Exchange Trade Funds.
The image of Kuala Lumpur as the financial center of the country is boosted by the continuing presence of important national financial institutions. The Bank of Malaysia has its headquarters here, and so do numerous branches of foreign banks and insurance companies with international staff.
In general, many foreign companies and multinational corporations, e.g. from the petrochemical industry or the IT sector, maintain regional offices or support centers in the city. This accounts for the large numbers of expats working in Kuala Lumpur.
The Medical and Tourism Sector
Other prominent providers of employment are educational institutions – Kuala Lumpur has several public universities and renowned private colleges. Hospitals and medical specialist centers are among the most important employers in Kuala Lumpur as well. After a mandatory three-year term in Kuala Lumpur’s public hospitals, many doctors find work in the city’s private clinics, which attract considerable numbers of medical tourists.
As the 8th most visited city in the world (2014 figures), Kuala Lumpur derives at least part of its economic power from tourism. People in Kuala Lumpur’s tourist industry have been trying hard to promote the city not only as a holiday destination but also as an international shopping destination. Conference tourism is another big source of income for the city.
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Work Permits and Taxes in Kuala Lumpur
The Expat Committee
Certain regulations apply to the employment of expats in Malaysia. This means that companies wishing to employ foreigners must request government approval first. The first instance in this process is the Expat Committee (EC).
Expats who have officially been granted expat status by the EC can then apply for a work permit. Two conditions must be fulfilled in order for your EC application to be successful: You must earn at least 5,000 MYR per month during your expat assignment in Kuala Lumpur, and your contract should envisage a two-year period of employment.
There are three categories of expat postings — ideally, your job should fall into one of them:
- Key post: You occupy a top managerial position in the company in question.
- Executive post: You hold a middle management post and have relevant professional experience and academic qualifications.
- Non-executive post: You are highly skilled thanks to your technical know-how and are thus indispensable for the company.
Prior to submitting the application to the Expat Committee, the company wishing to employ an expat must obtain approval from the authorized agency responsible for the “core business” area of that company.
A list of all authorized agencies and their areas of responsibility can be found in the online portal of the Malaysian Immigration Department. Once the company has been approved, the application will be considered by the Expat Committee and evaluated along the following criteria:
- the company’s equity and activities
- relevance of the post to the company’s activities
- local human resources
- income, age and professional experience of the future expat employee
If you need a visa in order to enter Malaysia due to your nationality, you should apply for one at this stage. Once you have been granted expat status by the EC, you should also apply for your work permit, referred to as the Employment Pass, or in rare cases, a Visit Pass (Temporary Employment) for shorter assignments. Close family members may accompany you on a Dependant Pass (i.e. Long-Term Social Visit Pass).
Paying Income Tax
Only income from Malaysian sources is taxable in Malaysia. As an expat, you may be profit from a special expat tax regime exempting you from all income tax if you don’t count as a fiscal resident and if your period of employment in Malaysia does not exceed 60 days per calendar year. On the other hand, if you are a non-resident for tax purposes but your period of employment exceeds 60 days, you will be taxed at a flat rate of 26% on all your income from Malaysian sources.
As a rule of thumb, foreigners who are physically present in the country for more than 182 days per year qualify as residents for tax purposes. This means that income tax is withheld from your salary and settled at the end of the financial year upon filing of your tax return.
Malaysia has signed full Double Taxation Agreements with 70 countries worldwide in order to facilitate international economic cooperation, including the employment of foreigners. For a list of all DTAs and further information on taxation in Malaysia in general, please consult the official website of the Malaysian Investment Development Authority.
Social Security for Expats in Kuala Lumpur
The System of Social Security
The two pillars of the Malaysian Social Security System are the Employees Provident Fund and the Social Insurance System. The latter administers benefits under two schemes, the employment injury scheme and the invalidity scheme.
The Provident Fund is made up of two individual mandatory accounts per person, both of which receive monthly contributions from the employee and the employer alike. The money in both Provident Fund accounts is used to pay for old-age, disability and survivor benefits when the employee becomes unfit for work or reaches the age of 55. This is the point when he or she may withdraw all funds.
Leaving Country Withdrawal
Before an employee reaches the age of 55, Provident Funds can only be used for government-approved purposes. These can be investment in unit trusts (account no.1) or the purchase of property, paying for education costs, or for the treatment of one of the designated critical illnesses (account no.2).
There is one exception: If you have contributed to the Employees Provident Fund during your time as an expat in Kuala Lumpur, you can withdraw all your funds upon leaving Malaysia. To find out whether you are eligible for a so-called Leaving Country Withdrawal, please fill in the relevant forms provided on the web portal of the Employees Provident Fund and submit them.
Social Security Coverage
Social Insurance is compulsory for all non-foreign employees up to the age of 55 earning more than 3,000 MYR per month. Employee contributions are calculated at 0.5 % of the employee’s monthly wage class earnings, matched by the employer with 0.5% of the monthly payroll. There are 24 different wage classes in Malaysia.
As a private sector employee in Malaysia, you automatically become a member of the Employees Provident Fund. Self-employed persons, domestic workers and foreigners can opt for voluntary coverage.
Minimum contributions to the fund are 11% of the employee’s monthly earnings until he or she reaches the age of 55, and 5.5% thereafter. The employer pays an additional 12% of the employee’s salary into the fund, or 6% once the employee has passed the age of 54. All contributions are split according to the following principle: 70% go into account no.1, 30% into account no.2.
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