Labuan: Country and Foreign Investment
Entry and Residence
To facilitate offshore activities in Labuan, a liberal immigration policy has been adopted. Multiple entry visas are traditionally issued to expatriates who have been granted employment permits to work with offshore companies in Labuan.
Foreign nationals may not usually obtain residence permits in Malaysia. Malaysia issues the following temporary permits:
- Tourist passes for visitors to Malaysia; these may be obtained at the port of entry;
- Transit visas, which are valid for one month;
- Business passes for foreign nationals attending business meetings; these may be obtained at the port of entry;
- Student passes for students attending approved educational institutions.
The nationality of the passport holder is considered in determining whether to issue these permits.
Any person who wishes to enter Malaysia to take up employment with a Malaysian company or firm must apply for an employment pass from the Department of Immigration.
Employment passes are issued for a specified period, usually two to three years, and are renewable for an additional two to three years.
Employment passes are granted on a case-by-case basis, generally for positions that require special technical knowledge or expertise not available locally or for positions that cannot be filled by local Malaysian citizens.
To obtain employment passes, expatriates must have a valid passport from their home country, a contract from their employer, a cover letter and three passport-size photos.
The employer of an expatriate must submit an application to the Department of Immigration and await a decision, which may take one month. After the employer receives a letter of approval, it must submit the passport of the employee and pay for the employment pass and the levy. The levy is applicable only to expatriates earning less than a designated amount per month or to expatriates holding employment passes valid for less than two years.
Licensed manufacturing companies that wish to hire expatriates must present copies of their manufacturing licenses. Service companies with foreign equity of more than 30% must seek the approval of the Foreign Investment Committee before hiring expatriates. Companies engaged in construction and project management must register with the Construction Industry Development Board before hiring expatriates. Companies engaged in the retail, trade, wholesale and direct-sales sectors that have foreign equity of more than 30% must seek the approval of the Committee on Wholesale and Retail Trade before hiring expatriates.
It is illegal to work without a valid employment pass; therefore, a foreign national may not work in Malaysia until he or she has received a work permit and all other necessary documents.
To obtain an extension, expatriates must submit new applications for extension three months before the expiration of their passes.
Expatriates who have not completed their terms of contract but wish to take up employment with other companies must leave the country for six months before taking up new employment.
A foreign national may start a business in Malaysia by registering a company locally. For companies that sell to the domestic market or render services within the country, a local joint venture may be required.
Companies that export at least 80% of their manufactured goods may be entirely foreign-owned. It is common for foreign nationals to head these operations.
In 2003, the Malaysian government decided to make it easier for companies to hire skilled foreigners, allowing for automatic approvals to be granted for the recruitment of highly skilled workers where there is no available local expertise.
From June 2003, the government further relaxed rules on employing expatriates, granting that manufacturing companies with foreign paid-up capital of at least USD2m be automatically permitted ten expatriate positions, with those to include five key posts. Under the amended rules, expatriates could be employed for up to ten years for executive posts and five years for non-executive posts.
Manufacturing companies with foreign paid-up capital of USD200,000–2m, meanwhile, were permitted automatic approval for up to five expatriate posts, including at least one key post.