Nepali Worker Visas for Malaysia Halted as Recruitment Agency Dispute Deepens

A recruitment dispute closes a major route to work

Malaysia has stopped registering new Nepali workers for medical examinations since October 15, blocking a step needed to obtain calling visas as the two governments clash over who can recruit them. The dispute centres on Malaysia's selection of 25 principal recruitment agencies and 250 supporting agencies, a structure Nepal has refused to authorise.

The interruption affects a destination that received about 132,000 Nepali workers in the last fiscal year. Around 400,000 Nepalis already work in Malaysia, which accounts for nearly 20 percent of Nepal's remittances, the money workers send home to their families.

Westinets Sdn Bhd, the company operating Malaysia's Foreign Worker Centralised Management System (FWCMS), has made reopening medical registration conditional on the 25 selected principal agencies becoming active. Nepal, meanwhile, has stopped recruitment approvals involving those agencies and opened investigations into their selection.

The result is a blockage at both ends of the process. Malaysia requires employers to use its approved agencies, while Nepal is withholding the permissions those agencies need to send workers. People seeking new jobs cannot complete the recruitment process while those positions remain unchanged.

Nepal has proposed joint working group meetings on November 18–19 or December 2–3 to resolve the dispute and renew the countries' labour memorandum of understanding. No agreed meeting date or date for restarting medical registration has been announced.

Why the agency list matters

Malaysia's Ministry of Human Resources announced on August 22 that employers recruiting foreign workers would have to use agencies registered with FWCMS. For Nepal, the structure gives 25 principal agencies access to the system, with each able to work with up to 10 associate or supporting agencies.

FWCMS is a digital system connecting parts of foreign worker recruitment, including employer applications, recruitment agencies, medical procedures and visa processing. Employers must obtain approval to hire foreign workers and select their recruitment agency through the platform.

Nepal wants all 1,114 active, licensed recruitment companies to be eligible for registration as principal agencies. The 25 principal places selected by Malaysia amount to about 2.2 percent of that total. Supporting agencies would participate through a principal agency rather than hold the same position in the system.

Malaysia's lists vary by country: 99 agencies from the Philippines, 40 each from Sri Lanka and Vietnam, 25 from Bangladesh, 23 from Cambodia, 10 each from India, Myanmar and Pakistan, and one from Thailand. Nepal is seeking the evaluation criteria and an explanation of how its agencies were chosen.

Two governments defend different approaches

Nepal has based its objections on the Foreign Employment Act, 2007, the Foreign Employment Rules, 2008, and the bilateral labour memorandum signed in 2018. Labour Minister Ramji Yadav has asked Malaysia to give all licensed Nepali agencies an equal opportunity to compete.

Mira Acharya, spokesperson for Nepal's Ministry of Labour, Employment and Social Security, explained that Nepal wants Malaysia to account for the laws governing recruitment companies in their home country.

We want to understand what criteria were used and what process was followed to select the Nepali recruitment agencies," Acharya said. "Our concern is that when one country implements its policy, it should also take into account the legal framework of the other country.

Malaysia's Human Resources Ministry set out its position in a letter dated October 6, 2026, addressed to Yadav. The letter said Malaysia would retain the 25 principal agencies and up to 250 supporting agencies after considering Nepal's request and discussing the matter at cabinet level.

Malaysia says a controlled recruitment structure can reduce unethical recruitment, excessive charges, exploitation and contract substitution. Contract substitution happens when the job terms a worker receives differ from those promised during recruitment, such as lower pay or different duties.

Human Resources Minister Ramanan Ramakrishnan defended the system after speaking with Yadav, saying its purpose was to protect workers while making recruitment easier for employers.

"Our stance on labour matters is clear. The system we have instituted must ensure workers' safety, streamline processes for employers, and prevent exploitation and abuse," Ramakrishnan said.

How the dispute reached a shutdown

Nepal's restrictions began before the October medical registration halt. From September 22, the Department of Foreign Employment stopped granting prior approval for demand letters submitted through the selected agencies. Demand letters set out employers' requests for workers and the jobs being offered.

Recruitment initially continued under Malaysian quotas issued before September 22. The subsequent closure of medical registration stopped another essential stage for new applicants, leaving the earlier recruitment route unable to function as before.

• August 22: Malaysia announced that foreign worker recruitment would run through agencies registered with FWCMS.
• September 11, 2026: Nepal sent a diplomatic note asking Malaysia to reconsider the agency restrictions.
• September 16: Yadav asked Malaysian Chargé d'Affaires Mohammad Firdous Azam to help arrange joint technical talks and provide the selection criteria.
• September 22: Nepal stopped prior approval for demand letters submitted through the selected agencies.
• September 24, 2026: The two countries held a telephone discussion referenced in Malaysia's subsequent letter.
• October 6, 2026: Malaysia confirmed in writing that it would retain the recruitment structure.
• October 15: FWCMS stopped registering new Nepali workers for medical examinations.
• November 5: Malaysia designated this as the start date for barring agencies outside its approved list from sending workers.

Nepal has sent three formal letters raising concerns, while Malaysia has issued two diplomatic notes defending its position. Nepal is asking for the previous arrangements to continue until a bilateral agreement resolves the uncertainty.

Agency owners face investigation

Nepal's Department of Foreign Employment has pursued a legal investigation alongside the diplomatic talks. The Foreign Employment Tribunal authorised arrest warrants against the owners of the 25 principal agencies so investigators could question them. Agency owner Rabin Gurung has been taken into custody.

The department sought explanations covering six areas, including how the companies registered with FWCMS, the criteria and evaluation used to select them, and which authorities recommended or approved their registration.

Investigators also asked whether the arrangement restricted competition, whether unlawful financial activity had taken place, and whether the process complied with Nepal's foreign employment laws. The department gave 250 supporting agencies seven days to explain their selection after seeking similar explanations from the principal agencies.

Preapproval for labour permits involving the selected agencies has been halted pending investigation and legal proceedings. The department has also begun inspecting the companies.

A further notice gave people who had not responded to arrest warrants in foreign employment cases 35 days from publication to contact the department or Nepal Police. Those failing to appear could face restrictions on bank accounts and travel, alongside further legal action.

Agency owners say they have submitted requested documents concerning company transactions and are ready to cooperate. They have also asked Nepal to seek their removal from FWCMS through diplomatic channels, arguing that the arrangement creates unfair competition.

Recruitment costs are part of the argument

Recruitment payments help explain why control of access to Malaysian jobs is so contentious. Nepali agencies previously paid around 1,000 Malaysian ringgit to licensed recruitment companies in Malaysia, compared with around 4,000 to 4,500 ringgit paid by Bangladeshi agencies.

Some payments involving Nepali agencies later reached 10,000 ringgit as competition for employment demand increased. That is ten times the earlier figure of 1,000 ringgit. Higher payments in the Nepali market also put pressure on Bangladeshi agencies to pay more.

These figures concern payments between recruitment businesses. Workers' own costs depend on how recruitment charges are allocated and collected. A system intended to protect workers needs a way to track payments, identify who bears each cost and investigate unauthorised charges.

Nepal's objections focus partly on whether the selection process limits competition among licensed businesses. Malaysia's defence focuses on whether a smaller, supervised group can make recruiters easier to monitor. Resolving the dispute requires agreement on both access to the market and the rules governing recruitment within it.

Dik Bahadur Khatri, chairman of the Nepal Association of Foreign Employment Agencies, has called for all licensed agencies to participate rather than restricting recruitment to the selected group.

The association does not support any system that creates a monopoly," Khatri said. "There must be participation, transparency and equal opportunity for all recruitment agencies.

Workers lose an alternative as Gulf recruitment falls

Malaysia's recruitment halt comes as new recruitment of Nepali workers for Gulf countries has fallen by more than 52 percent amid increased tensions in the Middle East. That decline had made Malaysia an especially important alternative for people seeking work abroad.

The 132,000 Nepalis who went to Malaysia for employment in the last fiscal year show the scale of the route now affected. Applicants face delays in completing medical and visa procedures, while Malaysian employers seeking new workers from Nepal face a recruitment process that neither government will currently approve in full.

Nepal's exposure also extends to household income. Malaysia provides nearly one fifth of the country's remittances, making continued access to its labour market important to families relying on earnings sent from abroad.

The restrictions described in the dispute concern new recruitment. Around 400,000 Nepalis are already working in Malaysia, where pay rules and employment conditions remain a separate part of their daily lives.

A proposed wage increase adds to the stakes

Malaysia has announced plans to raise its monthly minimum wage from 1,700 ringgit to 2,000 ringgit from June 2027. Prime Minister Anwar Ibrahim presented the increase during the 2027 budget announcement, saying it would benefit more than four million workers.

The proposed increase is 300 ringgit a month, or about 17.6 percent above the current minimum. Malaysia's minimum wage rules apply to foreign workers as well as citizens, including Nepalis employed in jobs covered by those rules.

Businesses with annual turnover below 50 million ringgit will be exempt from immediate implementation. Workers at those businesses would therefore receive the increase later than workers at employers required to apply it from the outset.

Anwar linked the measure to household costs and the gap between productivity and wages during his budget presentation.

"It is necessary to narrow the gap between worker productivity and wage. Wage growth has failed to keep pace with rising prices, increasing the cost-of-living burden on workers," he said.

Malaysia also plans a minimum starting salary of 2,500 ringgit for workers with intermediate skills and university graduates. The government has proposed tightening wage expense tax deductions for companies other than micro, small and medium enterprises by requiring payments through verified bank accounts using approved methods.

What the next talks need to settle

Nepal's proposed November 18–19 or December 2–3 meetings would provide an opportunity to examine the agency selection criteria, clarify how recruitment can comply with both countries' laws and negotiate renewal of the labour memorandum.

The International Labour Organization has also discussed the dispute with Malaysia's diplomatic representative. Its country head in Nepal, Numan Ozkan, met Azam for talks covering fair recruitment, decent work, safe and regular migration, and protections for migrant workers.

Nepal is seeking wider participation and continuation of the previous arrangements during negotiations. Malaysia is insisting on its approved agency structure. A practical agreement would need to connect Nepal's recruitment permissions with Malaysia's employer approvals, medical registration and visa processing.

Workers waiting for jobs need those stages to reopen together. Permission at one end alone would leave applications blocked at the other, while the investigation into the selected agencies continues through Nepal's legal process.

Key Points

• Medical registration for new Nepali workers seeking jobs in Malaysia stopped on October 15, blocking calling visas.
• Malaysia insists on 25 principal recruitment agencies and up to 250 supporting agencies; Nepal wants access for all 1,114 active, licensed companies.
• Nepal has suspended approvals involving selected agencies and is investigating their selection.
• The Foreign Employment Tribunal authorised arrest warrants for questioning agency owners; Rabin Gurung has been taken into custody.
• Nepal proposed talks on November 18–19 or December 2–3, with no agreed meeting or reopening date announced.
• Around 400,000 Nepalis work in Malaysia, which supplies nearly 20 percent of Nepal's remittances.
• Malaysia plans to raise its monthly minimum wage to 2,000 ringgit from June 2027, with delayed implementation for smaller businesses.