Kathmandu, October 9
Malaysia has told Nepal that it will not recruit Nepali workers through any channel other than its Foreign Workers Centralized Management System (FWCMS), deepening a dispute between the two countries over a recruitment framework that Nepal says restricts competition among manpower agencies.
Malaysia sent its response through diplomatic channels after Nepal formally objected to a system that allows only a limited number of recruitment agencies to process Nepali workers for Malaysian jobs.
In its response, Malaysia defended the new system, saying it was introduced to protect workers’ interests, improve labour market management and make recruitment more orderly. It also argued that the system would reduce the risk of workers being cheated and make it easier to take action against those involved in fraud.
The response has complicated an ongoing dispute over a framework involving 25 principal recruitment agencies and 250 associate recruitment agencies. Nepal has refused to accept the arrangement, arguing that it conflicts with the country’s laws, Constitution and bilateral labour agreement with Malaysia.
Malaysia, however, has reiterated that it will not recruit foreign workers through channels outside the FWCMS.
A source familiar with the matter said Nepal had presented its objections and arguments in a diplomatic note, to which Malaysia had responded with its own position.
The source said the foreign affairs and labour ministries would discuss the response and determine the next steps through coordination between the two governments.
Nepal has maintained that it does not intend to halt employment opportunities in Malaysia but wants all licensed manpower agencies to have equal access to the recruitment process.
New system set to take effect on November 5
Bestinet Sdn Bhd, the company operating Malaysia’s foreign worker recruitment system, stated in a memo issued on October 6 that the new arrangement for Nepal would come into effect on November 5, 2026.
The memo, issued to medical centres and recruitment agencies based on a letter from Malaysia’s Ministry of Human Resources, says recruitment from Nepal will follow a structure comprising 25 principal recruitment agencies (PRAs) and 250 associate recruitment agencies (ARAs) registered under the FWCMS.
Malaysia introduced the new foreign worker recruitment arrangement on August 22, allowing employers to recruit foreign workers only through agencies registered with the system.
Initially, just 25 Nepali manpower companies were listed as principal recruitment agencies. Following objections in Nepal, Malaysia added 250 companies as associate agencies under the original 25.
Nepal has rejected the arrangement despite the expansion to 275 companies, arguing that adding associate agencies does not address the fundamental problem of restricting recruitment to a selected group.
As Malaysia moves towards implementing the November 5 deadline, Nepal continues to seek the removal of the designated companies from the system and a return to a framework that gives all licensed agencies equal opportunities.
With the deadline approaching, it remains uncertain whether the dispute will be resolved in time or further disrupt recruitment of Nepali workers to Malaysia.
Prime minister and labour minister intervene
The dispute has escalated beyond administrative discussions, prompting interventions at the highest political levels.
On September 22, Prime Minister Balendra Shah held a telephone conversation with Malaysian Prime Minister Anwar Ibrahim and urged him to end the alleged syndicate and intermediary practices in the recruitment of Nepali workers.
Shah made clear that Nepal could not accept a system placing recruitment under the control of a limited number of companies. He also called for direct talks between the labour ministers of the two countries, stressing the need to make bilateral labour relations dignified, transparent and free from exploitation.
In response, Ibrahim said he was also opposed to syndicates and intermediaries and pledged to instruct his labour minister to coordinate with his Nepali counterpart to find a solution.
Despite the prime ministerial-level discussions, Malaysia’s Ministry of Human Resources has not changed its position on the new system. Bestinet has instead issued a notice setting November 5 as the implementation date for Nepal.
Labour Minister Ramji Yadav has also raised the issue with his Malaysian counterpart over the phone and met Malaysian Acting Ambassador to Nepal Mohammad Firdaus Azman.
During the meeting, Yadav said Nepal could not accept a system that designated a limited number of manpower companies as principal and associate agencies. He also sought official details on the selection process, evaluation system and criteria used to choose the listed companies.
Yadav argued that placing recruitment under the control of a limited number of agencies would violate Nepal’s laws and the bilateral labour agreement.
On September 24, Yadav held a telephone conversation with Malaysian Human Resources Minister Datuk Seri R. Ramanan, reiterating Nepal’s position that all manpower companies licensed in Nepal should have equal opportunities to send workers to Malaysia.
Nepal has also written to Malaysia seeking a meeting of the bilateral Joint Working Committee (JWC) to resolve the dispute. Malaysia has responded that the issue could be addressed through an immediate JWC meeting.
Nepal investigates 25 principal and 250 associate agencies
The Nepali government is investigating the 275 manpower companies listed by Malaysia under the FWCMS.
Acting on the instructions of the Ministry of Youth, Labour and Employment and a ministerial decision dated September 11, the Department of Foreign Employment has begun examining the listing process, selection criteria and relationships between the principal and associate agencies.
The department asked the 25 principal agencies to provide details explaining the basis of their selection, their business volume in sending workers to Malaysia, the process through which they brought other companies under their network, and their business and financial records.
Under Section 34 of the Foreign Employment Act, 2007, the department sought detailed information, including transactions over the past five fiscal years. The companies were given 15 days to submit the requested documents.
The department also sought explanations from the 250 associate agencies, asking on what basis they had been listed under the FWCMS, who had recommended or approved their inclusion, how they were connected to the principal agencies, and whether the arrangement restricted competition.
According to Department of Foreign Employment Director General Navaraj Dhakal, most of the 250 associate agencies have submitted their explanations, which are being reviewed.
Some companies have reportedly said they were not involved in the process and did not know how their names had been included on the list.
The department has said it will examine the responses and initiate action as required by law. Its investigation into the 25 principal agencies is also progressing.
No final decision has been reached, but the department has said action will be taken if violations of the Foreign Employment Act and its regulations are established.
Until the dispute is resolved, new labour approval processes for Malaysia involving the listed companies have been suspended. The government has said, however, that workers who had already received labour approval will not be prevented from travelling.
The investigation has raised questions about the role of the listed companies, while also affecting businesses that claim they were unaware of being designated as associate agencies.
Manpower association maintains its opposition
The Nepal Association of Foreign Employment Agencies has opposed the arrangement since Malaysia initially selected only 25 companies from among approximately 1,200 licensed manpower agencies in Nepal.
The association has warned that giving a limited number of companies exclusive access to recruitment for Malaysia would push other businesses out of the market and create a monopoly.
Association President Dik Bahadur Khatri has maintained that the arrangement, under which a selected group of principal agencies controls access for other companies through associate arrangements, is unacceptable.
According to Khatri, more than 1,100 foreign employment agencies are active in Nepal, and all should receive equal opportunities.
The association initially demanded that the 25 companies be removed from the list. During discussions at the Labour Ministry, the listed companies had reportedly agreed to remove their names from the FWCMS. The association also decided to suspend their membership.
However, the dispute became more complicated after Malaysia added 250 associate agencies under the original 25 principal companies. The association has argued that increasing the number of listed companies does not resolve the underlying problem and has called for the entire structure to be scrapped.
Malaysia had earlier asked Nepal to submit details of manpower companies meeting its prescribed criteria by November 15, 2025. Nepali recruitment businesses opposed the criteria, arguing that they would restrict access to the Malaysian labour market to a small number of companies.
The criteria included holding a manpower agency licence for at least five years, having experience sending at least 3,000 workers over the preceding three years, and maintaining a record of sending workers to at least three countries.
Other requirements included operating a permanent office of at least 10,000 square feet for three years, submitting valid licences and legal operating certificates, providing certificates of ethical and professional conduct, and obtaining five written commendations from international employers. The criteria also included provisions related to training and assessment centres and accommodation facilities.
Malaysia had requested a list of companies meeting these requirements for review and verification, stating that incomplete applications or those failing to meet the criteria would not be considered.
The process did not move forward after Nepal formally expressed its diplomatic objections. However, the dispute has resurfaced with the implementation of the FWCMS framework, under which a limited number of manpower agencies are designated as principal and associate recruiters.
With Malaysia insisting that recruitment must proceed through the new system and Nepal refusing to accept the structure in its current form, the November 5 deadline has emerged as a critical point in the dispute over access to Malaysian employment for Nepali workers.
