The Expatriate Services Division (ESD) is a control unit under the Malaysian Immigration Department that oversees the registration of companies hiring expatriates. It is compulsory to register with the ESD as a prerequisite to sponsoring an expatriate in Malaysia.
What are the eligibility requirements of the company for ESD registration?
- Paid up capital
The company must have sufficient paid up capital to justify hiring expatriates. The Malaysian government policy is to only allow SMEs or MNCs of certain financial size to hire expatriates.
These paid up capital guidelines are relevant to companies limited by shares only, or incorporated under the Sdn Bhd corporate entity in Malaysia. For Joint Ventures companies, a minimum 30% and maximum 49% shareholding is permitted for the foreign ownership.
- Corporate entity
There are five broad categories of corporate entities that are allowed to apply for ESD registration.
| Permitted corporate entities | Description |
|---|---|
| Sdn Bhd | Incorporated company limited by shares |
| Registrar of Societies (ROS) | Registered societies and associations |
| Professional Firms | Accounting or legal firms |
| Government Agencies | Government linked companies (GLCs), government agencies or companies endorsed by government agencies |
| International Organisations | Endorsed by the Malaysian government |
Ineligible corporate entities include general partnerships, Limited liability partnerships, sole proprietorship and enterprises.
- Permitted industry
This is the tricky part of the ESD registration process. It’s important to stay up to date on the permitted industries for the ESD registration, as it can depend on the priority of the current administration. Generally, the list below is permitted.
| List of permitted sectors Information Technology Oil and Gas or Energy Manufacturing Engineering Financial services Healthcare Education Tourism and Hospitality Specialised consultancies Sports Biotechnology Aviation Construction |
|---|
Common reasons for rejection
Despite meeting the requirements above, the ESD registration may still be rejected for the following reasons:
- Insufficient justification for the need of foreign talent vs local talent
- Incomplete or incorrect documents
- National security reasons
- Unannounced change in policy or quota
- Market saturation concerns and protection for local SMEs
Document checklist
| Copy of all current company directors' MyKad / Passport copy as per SSM registration. Comprehensive Company Profile (include the following items): i. background of company ii. business activities iii. organization structure iv. location of company / number of branches (branch address) v. photo of the premise (front and interior) vi. photo of the products / services offered Copy of Company’s Latest Phone Bill Tenancy Agreement / Sales & Purchase Agreement (S&P) Latest SSM Form 9 or Form 83A Latest SSM Form 24 or Form 80A Latest SSM Form 49 or Form 79 Latest Audited Financial Report/ Management Accounts for newly incorporated companies Copy of Local Authorities License also known as Lesen Pihak Berkuasa Tempatan (PBT) (if applicable) Other business licenses Other documents specified upon request |
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What are the expected timelines?
Once your documents are complete, and a submission is made on the ESD portal, you can expect a decision within 5 working days. If more details or documents are required, you will be informed, and you will be required to furnish the incomplete documents.
What to do if your ESD company registration is rejected?
An appeal process is allowed within 7 days after a rejection decision. During the appeal, it is important to attach an appeal letter and provide rectification or elaboration to counter the rejection reason. For example, if the committee decided that your company “does not require expatriate skills”, it is advisable to elaborate more on the specific skills of the expatriate identified, provide a more detailed job description or provide more data validation on the niche market the business is targeting. You may also endeavour to obtain supporting letters from your embassy or any relevant international organisation or Malaysian authority.
Once the appeal is resubmitted, the decision should be made within 14 days. If it is approved on appeal, then you may proceed as usual with the Employment Pass applications. However, if the appeal is rejected, there will be a 1 year cooling period before your company can apply again.
FAQ
- Can a newly incorporated company register with ESD?
Yes. The main concern is often regarding the audited financial report, which a company only has after 18 months of incorporation. However, new companies can provide alternative documents.
- Do I need a physical office or can I use a virtual office or home address?
A virtual office is permitted, however, a physical office is always advisable. This is because the application also asks for photos of the office space and the signage. A home address is not recommended, especially because the premise license is part of the requirements and generally home addresses are unable to obtain business premise license due to the classification of your property type.
- How do I find out if my industry is restricted for ESD registration?
The general guidelines exist on the immigration website and various portals. However, the experience of immigration consultants in Malaysia is still valuable to avoid wasting unnecessary time and resources on the wrong positioning of your application. Alternatively, if your industry or proposal is very niche, the best option is to make a submission and wait for a decision.
Final notes: This guide is provided for ESD registration in West Malaysia only. East Malaysian states have their own requirements to hire expatriates. For a Sarawak Employment Pass guide, visit here.
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