Malaysia is raising the bar on local talent development with the introduction of the 1:3 Internship Policy, a progressive initiative by the Ministry of Human Resources (KESUMA), implemented through TalentCorp. For businesses operating in Malaysia with foreign hires, this policy introduces a new responsibility alongside every Employment Pass (EP) approval.
Below, we highlight the important information regarding the new policy.
What is Malaysia’s 1:3 Internship Policy?
The policy directly links expatriate hiring to local talent development. For every expatriate hired, companies are required to provide internship placements for local students, with the ratio determined by the Employment Pass (EP) tier. The goal is to bridge the gap between academia and industry, giving Malaysian students structured, hands-on experience, and addressing the 250,000 to 280,000 students who require industrial training placements each year.
What are the eligibility and ratios?
Companies with approved expatriate employment passes must provide internship placements according to the following ratios:
- Employment Pass (EP) Category I — 1 EP approval requires 3 internship placements
- Employment Pass (EP) Category II — 1 EP approval requires 2 internship placements
- Employment Pass (EP) Category III — 1 EP approval requires 1 internship placement
Alternatively, companies may fulfil the requirement by offering internship placements equivalent to 2% of their total workforce, where the standard ratio calculation exceeds that figure.
Are some companies eligible for exemption? If yes, which?
Certain companies may be eligible for appeal or exemption, including new companies operating in Malaysia for less than two years, those with Representative or Regional Office status, companies granted government tax exemptions for critical sectors such as digital and energy, or other special circumstances subject to committee review.
What are the internship requirements?
Internships must be structured, quality, and paid, with a minimum duration of 10 weeks and a minimum monthly allowance of RM500 or more depending on the student’s level of study. All placements must be MySIP-endorsed.
What was the implementation timeline?
The policy has been rolled out in phases:
- 15 January 2025 – Official announcement of the 1:3 Policy
- 15 February 2025 – Pilot programme launched via MyNext as the implementation platform
- 1 June 2026 – Full implementation in effect
Employers with existing or upcoming EP approvals should ensure compliance is in place now.
How does the process work?
Once an EP is approved, companies follow a straightforward post-approval process:
- MYXpats Centre [Data migration of approved companies, ratio formulation, and MyNext pre-registration
- MyNext – Company onboarding, account activation, and internship framework setup
- MyNext + MySIP – Post internship advertisements, access MySIP facilitation for incentives, and match with talent supply
Companies recruit interns through the platform, monitor placements, and upon completion, receive a Letter of Endorsement (LOE) to claim their double tax deduction incentive.
What are the incentives for employers?
Compliance isn’t just a regulatory obligation, it comes with a tangible financial benefit. Companies can claim double tax deductions on internship-related expenses through MySIP, making the policy a cost-effective investment in Malaysia’s future talent pipeline.
Navigating Malaysia’s employment compliance requirements can be complex. If you have any questions about the 1:3 Internship Policy, get in touch with our team today. For the latest updates on Malaysia’s employment regulations, visit our Malaysia Labour Law Updates page or subscribe to our LinkedIn Newsletter for monthly insights.
For more information, please visit the Ministry of Human Resources – TalentCorp’s website: https://www.talentcorp.com.my/1to3policy/