The freeze on hiring foreign workers would be enforced with immediate effect and will stay in force while the government reviews the two-tier levy programme for foreign labourers, Deputy Home Minister Datuk Nur Jazlan Mohamed said.
Mohamed, who is also the Home Minister, said the recruitment of foreign workers will resume once the government evaluates the current pool of foreign workers in the country.
He said that there was no fixed timeline for the recruitment freeze.
"We'll take the time we need to conduct the review," he said.
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The announcement came a day after Malaysia signed a Memorandum of Understanding (MoU) with Bangladesh to bring in 1.5 million workers from the country over the next three years.
The minister, however, said the MoU with Bangladesh could be implemented anytime in the next three years. "Therefore, even if we don't implement it next year, it does not matter," he said.
Worker groups such as the Malaysian Trade Unions Congress (MTUC) had said locals should be given priority for jobs.
There are currently an estimated 2.1 million registered foreign workers in Malaysia, along with 1.7 million illegal foreign workers.
The migrants, who are mostly from India, Indonesia, Myanmar, Nepal and Bangladesh, work mostly at construction sites, palm plantations, vegetable farms and restaurants.