By Datuk Wira Eric Ng, Founder & Group Chief Executive Officer, ISP Group of Companies
As Malaysia prepares for Budget 2027, sustaining investment, strengthening economic competitiveness and creating quality jobs remain important priorities. However, ensuring that new investments deliver their full economic potential will require more than financial incentives. Malaysia must also strengthen the infrastructure and supporting ecosystem that businesses and workers depend on.
Datuk Wira Eric Ng, Founder and Group Chief Executive Officer of ISP Group of Companies, argues that workforce facilities, particularly Purpose-Built Workers’ Accommodation (PBWA), should form a more integral part of the country’s industrial planning.
Malaysia has made considerable progress in attracting manufacturing, logistics and other industrial investments. The next challenge is ensuring that industrial parks, utilities, transport links, workforce facilities and sustainable development can keep pace with this expansion.
With Malaysia’s low-skilled foreign workforce estimated at 2.5 million workers in 2024, industry data indicates that structured workers’ accommodation is already operating at more than 90% occupancy nationwide. This points to a widening gap between accommodation supply and industrial demand.
1. Make Workers’ Accommodation Part of Industrial Planning
Industrial investment ultimately depends on a stable and productive workforce. Yet workers’ accommodation is often planned separately from industrial development, potentially leaving businesses without sufficient suitable facilities and placing additional pressure on surrounding communities.
Ng believes Malaysia should adopt a more integrated approach by planning PBWA alongside industrial developments. This would allow workforce facilities to be considered from the outset rather than addressed only after new investments have increased demand.
The scale of the accommodation shortfall is significant. When the Ministry of Human Resources last assessed nationwide compliance, more than 90% of foreign workers’ accommodation fell short of the minimum standards under the Workers’ Minimum Standards of Housing and Amenities Act 1990 (Act 446).
A 2023 study by the International Organization for Migration also documented cases in which 30 to 40 workers shared spaces designed for just 10 people.
These conditions point to a structural issue that cannot be resolved through enforcement alone. Deliberate planning and investment will be needed to expand supply and improve accommodation standards as Malaysia’s industrial sector grows.
2. Use Budget 2027 to Incentivise Quality Workers’ Housing
Ng proposes that Budget 2027 encourage investment in quality and sustainable workers’ accommodation, focusing not merely on increasing capacity but also on providing living environments that meet appropriate standards for safety, security, hygiene and wellbeing.
He recommends a two-tier incentive structure, combining an immediate tax measure with a longer-term investment incentive tied to certified accommodation quality.
Extend Tax Deductions for Accommodation Costs
As an immediate measure, Malaysia could extend tax deductibility to capital and operating expenditure related to PBWA.
Ng points to Vietnam’s treatment of workers’ accommodation rental costs as a deductible business expense for enterprises operating in industrial zones as a potential reference.
Such a measure could offer a relatively straightforward way to encourage businesses to invest in workers’ accommodation while supporting the wider industrial ecosystem.
Introduce Incentives for GreenRE-Certified Developments
As a medium-term measure, Malaysia could introduce a dedicated Investment Tax Allowance through the Malaysian Investment Development Authority (MIDA) for PBWA developments certified by GreenRE.
Ng suggests benchmarking the incentive against Thailand’s Board of Investment scheme for affordable housing, which provides a three-year corporate income tax exemption on infrastructure and common-area costs, alongside import duty exemptions on related machinery for projects that meet specified quality and pricing conditions.
A comparable certification-linked incentive could encourage developers to move beyond minimum compliance towards higher-quality and more sustainable workers’ accommodation.
3. Build Industrial Infrastructure Before Demand Peaks
Malaysia must also consider investing in supporting infrastructure ahead of demand rather than waiting for capacity constraints to emerge.
As competition for regional investment intensifies, the ability to offer a ready and well-supported industrial ecosystem could become a competitive advantage. Proactive investment in industrial facilities and supporting infrastructure would allow Malaysia to respond more quickly to new investment opportunities.
Johor illustrates the urgency of this approach. The Johor-Singapore Special Economic Zone is expected to attract substantial new industrial investment, even as the state already faces one of the country’s largest gaps between workers’ housing supply and demand.
Without adequate planning, new industrial activity could place further pressure on existing accommodation and infrastructure.
Ng argues that faster delivery will depend on coordinating roads, utilities, public transport, digital connectivity and workforce accommodation so that these elements are developed together.
He also proposes establishing a single reference point between Federal and State authorities for PBWA approvals to improve coordination and reduce delays. This could draw inspiration from Singapore’s Ministry of Manpower, which plays a direct role in dormitory planning.
4. Strengthen Malaysia’s Competitiveness Through Sustainable Development
The case for better workers’ accommodation extends beyond housing. It is closely linked to Malaysia’s ability to attract investment, support businesses and maintain a productive workforce.
Investors need confidence that the locations they choose can provide the facilities and infrastructure required for operations to expand. This includes reliable utilities, transport connections, digital infrastructure and suitable workforce accommodation.
Integrating these elements into industrial planning would help Malaysia build a more resilient and sustainable development model, while reducing the risk of infrastructure shortages undermining the benefits of new investment.
For Budget 2027, this means looking beyond tax measures and investment incentives to consider the wider conditions that allow businesses and workers to thrive.
Turning Investment Into Long-Term Economic Value
Malaysia has demonstrated its ability to attract industrial investment. The next step is ensuring that its supporting infrastructure, workforce ecosystem and sustainable development capabilities are equally prepared for continued growth.
Ng argues that the country’s industrial progress should not be measured solely by the amount of investment secured, but also by whether the necessary foundations are in place to translate that investment into lasting economic value.
By integrating workers’ accommodation into industrial planning, incentivising higher-quality housing and developing infrastructure ahead of demand, Budget 2027 could help Malaysia strengthen its competitiveness while supporting the needs of its workforce.
Ultimately, sustainable industrial growth requires more than incentives. It requires an ecosystem capable of supporting businesses, workers and communities over the long term.
