Starting from 1 June 2026, the “1:3 Internship Policy” will be fully implemented, requiring companies that employ foreign workers holding an Employment Pass (EP) to provide internship opportunities to local students. The key features of this policy and important practical considerations are as follows.
Overview and Scope of Application
The policy requires companies to offer up to three internship placements for local students for every new or renewed expatriate Employment Pass (EP) endorsed.
Applicable Entities
Companies that have been granted endorsement for EP approvals under the Malaysia Expatriate Services Centre (MYXpats), Malaysia Digital Economy Corporation (MDEC), Malaysian Investment Development Authority (MIDA), and Iskandar Regional Development Authority (IRDA).
The policy applies to all EP categories: Category 1 (EPI), Category 2 (EPII), and Category 3 (EPIII).
Exemptions
Companies operating in Malaysia for less than 2 years, companies with Representative or Regional Offices (RERO), and companies receiving government tax exemptions (such as Pioneer Status or Investment Tax Allowance) in key sectors like digital and energy are excluded from this policy.
Internship Requirements and Quotas
Internship placements must meet the requirements of the National Structured Internship Programme (MySIP) endorsed by TalentCorp.
Conditions
The internship must be at least 10 weeks in duration, and interns must be paid a minimum monthly allowance of RM500 or RM600, depending on their level of study.
Timeline
Companies must hire the interns within 12 months from the date they receive the official notification from TalentCorp regarding their inclusion under the policy.
Required Quotas
The required number of interns depends on the EP category: 3 placements for 1 EPI, 2 placements for 1 EPII, and 1 placement for 1 EPIII.
Change to the 2% Cap Rule
Effective June 1, 2026, the option to limit the intern quota to 2% of the company’s total workforce is no longer a default option. Companies wishing to be assessed based on the 2% allocation must submit a formal appeal through the MyNext platform, which is subject to approval by the secretariat.
Risks of Non-Compliance and Incentives
Impact of Non-Compliance
While there are no direct financial penalties, a company’s fulfilment of the policy will be taken into account with appropriate weightage in the assessment of future EP approvals. Therefore, non-compliance poses a risk of unsmooth future EP applications.
Incentives
Companies that participate in MySIP and offer quality internships will benefit from double tax deductions for costs incurred during the internship programmes.
Specific Actions for Companies
System Registration
Upon receiving official notification of EP endorsement, companies are required to register on the MyNext platform and add the Internship Person-in-Charge (PIC) within 30 days.
Advertisement and Declaration
Companies must advertise internship opportunities on MyNext under “MySIP Advertised”. If interns are recruited directly from universities or other portals, the details must be declared under “MySIP Direct Hiring” on the platform.
Placement
Interns are not required to report directly to or be directly involved with the expatriate. Companies are free to place interns in any suitable role or field.