Malaysia is undertaking a significant transformation in its expatriate employment framework. In a move to align foreign expertise with local talent development, the Ministry of Human Resources (KESUMA) and TalentCorp have introduced the 1:3 Internship Policy.
For organisations relying on global talent, this is more than a compliance update—it is a new operational reality. Beginning with a pilot phase on 15 February 2025 and rolling out fully by 1 January 2026, this policy mandates that Employment Pass (EP) approvals be tied to structured internship opportunities for Malaysian students.
What is the 1:3 Internship Policy?
The core objective of the policy is reciprocity: granting access to foreign expertise should directly contribute to upskilling the future Malaysian workforce.
Under this directive, companies hiring expatriates must offer paid, structured internships to local students. The number of interns required correlates directly with the category of the Employment Pass (EP) being applied for.
The Ratios: Calculating Your Obligation
The “1:3” moniker refers to the highest tier of obligation, but the actual requirement scales based on the expatriate’s salary level (EP Category):
| Employment Pass Category | Internship Requirement |
|---|---|
| EP I (Top Management / High Skilled) | 3 Interns per EP holder |
| EP II (Management / Professional) | 2 Interns per EP holder |
| EP III (Junior Professional) | 1 Intern per EP holder |
The “Safety Valve”: The 2% Cap
The government recognizes that not all companies have the capacity to host dozens of interns. If the calculated requirement exceeds 2% of your total workforce, your obligation is capped at 2%. This ensures the policy remains feasible for smaller entities.
Implementation Timeline & Coverage
The government has adopted a phased approach to allow businesses time to adapt.
Phase 1: The Pilot (15 Feb 2025 – 31 Dec 2025)
- Who is covered? Companies classified as Tier 1 and Tier 2 under the MYXpats system (typically large MNCs, GLCs, and companies with strong track records).
- The Rule: Internship obligations apply to new EP applications and renewals during this period.
Phase 2: Full Implementation (From 1 Jan 2026)
- Who is covered? All companies hiring expatriates, regardless of MYXpats tiering.
Important Note on Exemptions: Current guidelines indicate exemptions for specific categories, including Representative/Regional Offices (REROs) and companies operating in Malaysia for less than two years. Businesses should verify their specific status as the pilot phase progresses.
Operational Requirements: It’s More Than Just Hiring
Merely hiring an intern is insufficient. To satisfy the EP condition, the internship must meet MySIP (Malaysia Structured Internship Programme) standards:
- Duration: Minimum of 10 weeks.
- Compensation: Interns must be paid a minimum stipend based on their education level:
- Diploma/Certificate: Min. RM500/month
- Degree/Masters: Min. RM600/month
- Structure: The programme must have defined learning outcomes and supervision.
- Platform: All placements must be processed through the MyNext platform.
The Silver Lining: Financial Incentives
While this policy increases the HR workload, it also offers a significant financial benefit. By adhering to MySIP standards, companies are eligible for Double Tax Deductions on qualifying expenses, including:
- Monthly intern allowances.
- Training-related costs.
- Administrative expenses related to the programme.
Effectively, the government is subsidising the cost of your talent pipeline in exchange for your participation.
Strategic Implications: How to Prepare
For HR, Finance, and Compliance teams, the time to audit your workforce planning is now:
- Forecast Your Headcount: Review your 2025/2026 expatriate hiring and renewal plans. Map these against EP I, II, and III ratios to estimate your intern quota.
- Calculate the Cap: Check if your estimated quota exceeds 2% of your total workforce and adjust planning accordingly.
- Budget for Stipends: Ensure your 2025 budget includes provisions for intern allowances and administrative costs of supervision.
- Register on MyNext: Familiarise your team with the MyNext portal, as this will be the mandatory hub for declaring placements.
- Formalise Your Internship Programme: Move away from ad-hoc internships. Create documented descriptions and learning goals to ensure MySIP compliance.
Conclusion
Malaysia’s 1:3 Internship Policy represents a paradigm shift—viewing expatriate hiring not just as a business necessity, but as a vehicle for national talent enrichment. While the compliance requirements are stricter, the opportunity to build a robust local talent pipeline—subsidised by tax incentives—is a strategic advantage for forward-thinking companies.
Need help navigating these changes?
At Wize Platform, we specialise in simplifying expatriate employment, immigration compliance, and HR advisory. We can help you audit your current EP status, calculate your internship obligations, and design compliant frameworks to ensure a smooth transition during the pilot and full implementation phases.