Nepal has formally requested Malaysia to remove 25 Nepali foreign employment companies from its Foreign Worker Centralized Management System (FWCMS), a move that comes amid a dispute over the structure of foreign worker recruitment.
The request was sent by the Ministry of Labour, Employment and Social Security through the Ministry of Foreign Affairs in September 2026. This action follows applications from the 25 companies themselves, who sought to withdraw from the FWCMS, stating they do not wish to be part of the arrangement, according to Mira Acharya, spokesperson for the Ministry of Labour, Employment and Social Security.
The dispute began after Malaysia designated 25 Nepali foreign employment companies as “principal” agencies and another 250 as “supporting” agencies for recruiting Nepali workers. Nepal’s government maintains that it does not accept this structure, asserting that all licensed foreign employment companies have equal status under Nepali foreign employment laws. The Nepal-Malaysia labour agreement, signed in October 2018, also does not provide for a principal and supporting agency arrangement.
Hari Bahadur Dangi, general secretary of the Nepal Association of Foreign Employment Agencies, stated that the companies wished to withdraw because they found an arrangement that connects only a limited number of foreign employment companies with Malaysian employers unacceptable.
Investigation and halted approvals
In response to the controversy, the Department of Foreign Employment has launched an investigation into the involvement of the 25 foreign employment companies in the FWCMS. The department has requested detailed information on their transactions, the criteria for their selection, their past involvement in recruiting workers for Malaysia, and the process by which other companies were brought under them.
The 25 principal companies have also been directed to submit their business and financial details for the past five fiscal years, including transaction records, the number of workers recruited, service charges, taxes, and audited financial statements, as per Section 34 of the Foreign Employment Act 2007.
Earlier, the Department of Foreign Employment had already halted issuing new pre-approvals for Malaysia-bound workers to the 250 foreign employment companies affiliated with the 25 principal companies under the FWCMS. This suspension will remain in effect until the investigation is completed.
High-level diplomatic efforts
Efforts are underway through high-level political and diplomatic channels to resolve the complexities in Nepal-Malaysia labour relations, the Ministry of Labour, Employment and Social Security confirmed. Prime Minister Balen Shah of Nepal and Prime Minister Anwar Ibrahim of Malaysia have held discussions on the matter.
Additionally, Ramji Yadav, Minister of Labour, Employment and Social Security, held a telephone conversation with Rahman Ramakrishnan, Malaysia’s Human Resources Minister, urging equal opportunities for all licensed Nepali foreign employment companies in the worker recruitment process. Spokesperson Acharya expressed confidence that the complexities would be resolved through high-level dialogue.
Malaysia, however, has maintained that the FWCMS is intended to streamline the recruitment of foreign workers under government oversight, control illegal fees, middlemen, and fraud. The system facilitates employer registration and the recruitment process for foreign workers, requiring employers to obtain prior approval from relevant authorities.
Uncertain future for workers
Despite Nepal’s clear stance, Malaysia has not yet made any formal decision regarding changes to the FWCMS system that limits the number of recruitment agencies. If the dispute prolongs, an estimated 300,000 Nepali workers could have their employment prospects affected over the next two years. Currently, approximately 400,000 Nepali workers are employed in Malaysia.
While there was an understanding to revise the Nepal-Malaysia labour Memorandum of Understanding, the implementation date for this revision has not yet been set. Furthermore, Malaysia has not provided clear answers regarding the specific criteria used to list Nepali manpower companies in the FWCMS and who evaluated them.
Malaysia is also discussing increasing the minimum monthly wage for low-wage workers from the current MYR 1,700 to MYR 2,000, with a final decision expected in the 2027 budget.
