A dispute over 25 recruiters puts Malaysia, a top job market for Nepalis, at risk
Malaysia wants hiring to run through a short list of Nepali agencies. Kathmandu has refused and stopped approving new demand letters through them, while about 400,000 Nepalis work there.
Malaysia is one of the most sought-after destinations for Nepali migrant workers, The Kathmandu Post noted. It was the most popular of all in the month to mid-June, with 14,192 labour approvals, according to Department of Foreign Employment data reported by Himal Press. It is now the subject of a dispute that could close it to new Nepali recruits.
The quarrel is about who gets to do the recruiting. On 21 August Malaysia's Human Resources Ministry authorised a limited number of recruitment agencies from ten labour-source countries on its Foreign Worker Centralised Management System, the online platform through which Malaysian employers apply for foreign workers, The Kathmandu Post reported. For Nepal it named 25 "principal" agencies, each allowed to work with up to ten affiliates. A further 250 Nepali firms were later listed as supporting agencies, out of about 1,200 licensed recruiters, Onlinekhabar reported.
Malaysia says the model is meant to make recruitment more effective and transparent, and to control illegal fees, middlemen and fraud. Its government has told employers to recruit only through agencies registered on the system, according to Onlinekhabar.
Kathmandu says no
Nepal rejects the arrangement. Its position is that all licensed recruiters have equal standing under Nepali law and that the 2018 labour agreement between the two countries makes no provision for principal and supporting agencies. "Issues related to worker recruitment should be decided on the basis of mutual agreement," said Mira Acharya, the labour ministry's spokesperson, according to The Kathmandu Post. The Nepal Association of Foreign Employment Agencies has called the arrangement a move towards monopoly.
The government has acted on that position. The Department of Foreign Employment stopped granting prior approval for demand letters submitted through the selected agencies from 22 August, and the Nepali embassy in Kuala Lumpur was told not to certify them, The Kathmandu Post reported. Recruitment is continuing only for quotas Malaysia issued before then. The department is also examining how the agencies came to be selected and has asked the 25 principal firms for five years of business and financial records, Onlinekhabar reported. The 25 firms have themselves asked to be removed from the system, and on 2 October Nepal formally asked Malaysia to delist them.
Labour Minister Ramji Yadav has twice raised the matter with Malaysia's chargé d'affaires, Mohammad Firdous Azam, and asked for an early meeting of the joint technical committee set up under the labour agreement, The Kathmandu Post reported. The labour ministry says talks are now happening at prime ministerial and ministerial level. The International Labour Organization's country head in Nepal has also met the Malaysian envoy.
Why it matters now
The stakes are large. Around 400,000 Nepalis work in Malaysia, making Nepal the third-largest source of labour there after Bangladesh, with about 900,000, and Indonesia, with about 550,000, The Kathmandu Post reported. Ganesh Gurung, a labour expert and former planning commission member, told the paper that jobs in the Gulf were shrinking because of tensions in West Asia and that losing Malaysia would not be a solution.
The Gulf has already proved fragile this year. The government suspended labour permits for 12 countries in West Asia from 1 March to 20 April after the conflict escalated, which helped push approvals for the first 11 months of 2025/26 down 4.99% to 722,841, Himal Press reported. In the first month of the new fiscal year, Malaysia ranked second with 12,498 approvals behind the United Arab Emirates with 18,784, out of 70,441 in all, Onlinekhabar reported.
The money at stake is a large part of the economy. Even with fewer approvals, remittances rose 41.2% to Rs 1,916.9bn in the first ten months of 2025/26, Himal Press reported; our report on remittances and the budget has the full-year picture.
What to watch: whether the joint technical committee meets, whether Malaysia agrees to delist the 25 firms or broaden access, and monthly approval data for Malaysia once pre-August quotas run out.
How this story was made: researched and written by The Standard’s desk with AI assistance, from the published reporting and official data credited below, and checked against those sources. Our standards.
The long view Nepal's remittance economy
