KUALA LUMPUR (Jan 16): The Federation of Malaysian Manufacturers (FMM) on Thursday urged the government to refine its new intern hiring policy, and also called for the lifting of the freeze on foreign workers.

In a statement, FMM acknowledged that the decision to mandate companies to hire up to three interns for every expatriate employed was aimed at addressing graduate and youth underemployment, but said the implementation of the policy poses practical challenges for the manufacturing sector.

"The manufacturing industry is undergoing rapid transformation driven by the Fourth Industrial Revolution (IR 4.0), necessitating the immediate filling of vacancies with skilled talent. The urgency to meet production demands makes it impractical to rely solely on internship programmes to bridge these gaps," the federation said.

FMM instead advocated for a “place-and-train” system, such as apprenticeship schemes, which it described as a proven method for generating interest among interns for long-term careers in the manufacturing sector.

"This approach allows interns to gain hands-on experience, aligning their skills with industry requirements while addressing immediate workforce shortages,” it said.

On Wednesday, the Human Resources Ministry through Talent Corporation Malaysia Bhd (TalentCorp) announced its plan to implement the 1:3 practical training policy, seeking to benefit 100,000 local students.

The new policy requires companies employing expatriates in Malaysia to provide practical training placements for students from higher education institutions across the country. Through this policy, involved companies will enjoy tax relief incentives through the National Structured Industrial Training Programme (MySIP) while helping and training local talents to face the challenges of a competitive job market.

This policy will be monitored and implemented in phases, starting with a pilot phase from Feb 15 to Dec 31 and will be fully effective on Jan 1, 2026.

FMM, in its statement, reiterated its call for the establishment of a National TVET Apprenticeship Fund, initially seeded with RM100 million from the government and sustained through the allocation of 60% of the foreign worker levy.  

The federation said this initiative is vital for developing the skilled talent pool necessary to support the industry’s transformation under the New Industrial Master Plan 2030.
  
"By providing financial incentives and resources, the fund would enable companies to develop robust and structured internship and apprenticeship programmes. Furthermore, by subsidising training costs and offering targeted grants, the fund would significantly enhance industry participation in workforce development, particularly in the areas of TVET and skilled talent," it said.

FMM added that "a more balanced approach" is essential, where the policy complements rather than complicates the expatriate hiring framework.

"Expatriates are essential to the manufacturing sector, bridging skill gaps with specialised expertise, driving innovation, and providing strategic leadership. They ensure knowledge transfer, integrate advanced technologies, and align operations with global standards, enabling Malaysian manufacturers to remain competitive and innovative," it added.

FMM also urged the government to lift the freeze on foreign workers under the multi-tier levy mechanism and expedite its implementation.  

The federation specifically requested the Home Ministry to prioritise approvals for workers who were ready to travel but missed the May 31, 2024 deadline due to administrative delays. It also called for the freeze to be lifted for new foreign worker intakes in industries facing critical labour shortages, including manufacturing.  

"By prioritising workers who are ready to travel and expediting the approval process for new foreign workers, the manufacturing sector can rapidly address labour shortages and meet production demands, particularly as industries ramp up operations post-festive season. The availability of foreign workers is critical to maintaining productivity levels, fulfilling customer orders, and safeguarding Malaysia’s global competitiveness," it said.