Northern Region at crossroads in 2026 as businesses gain and lose from trade tensions

Striking a tricky balancing act amid ongoing geopolitical tensions in 2025, Malaysia’s Northern Region sought to capitalise on opportunities arising from the trade war.

“Malaysia has emerged as a promising option for global companies looking to diversify supply chains,” notes Lee Ling Lim, Manager at Robert Walters Malaysia’s Northern Region. “Chinese firms were quick to meet that demand by establishing operations in the Northern Region, which they viewed as a strategic refuge free from US sanctions. The logistics sector also expanded rapidly in the past year to meet skyrocketing demand, with companies choosing Malaysia for its competitive costs, ample labour supply and strategic access to air and sea transport.”

The Northern Region of Malaysia, in particular, houses facilities for capital equipment makers, chip assembly, testing and packaging for over 350 multinational technology companies. While hiring volumes have benefited from the China+1 strategy, the escalating US tariffs on semiconductor imports have left many businesses mired in uncertainty. These measures pose significant challenges to the region’s intricate ecosystem, especially for suppliers and small-to-medium enterprises that remain in limbo, worried that rising manufacturing costs and tightening trade restrictions could lead to declining orders. Many have begun cutting costs in anticipation that operations may shift to other regions, or even return entirely to the US.

“As far as the hiring market goes, the influx of Chinese firms and diversification initiatives by global companies have created plenty of new job opportunities. However, the semiconductor space is trending towards cost-cutting and retrenchments,” recounts Lee Ling. “It remains to be seen if Malaysia can continue to position itself as a critical player in the global semiconductor supply chain, while also attracting new investments in other industries without incurring backlash from both major powers.”

Read on to find out more about Lee Ling’s expectations of the labour market and hiring trends for Malaysia’s Northern Region professionals in 2026.

Employers prioritise skills, flexibility and retention

The inclination towards skills-based hiring is set to continue in the year ahead. Companies will use a candidate’s past experience and practical skills to determine whether they are the right match, rather than prioritising formal credentials. This style of hiring generally gives employers access to a larger talent pool, allowing them to reduce training costs and time if they find the right individual who can contribute immediately to the role.

Competition for talent remains fierce, so businesses will invest more in upskilling and reskilling, offering up more opportunities for internal mobility. This approach helps reduce the costs and time associated with external hiring while also fostering loyalty and engagement among existing employees. Ultimately, retaining and developing current talent proves far more effective and sustainable than relying solely on talent attraction.

Contracting is emerging as another key trend in the hiring market. Particularly in sectors affected by global trade tensions and declining demand, companies are choosing to hire short-term talent as part of broader efforts to reduce fixed costs. Through contracting, companies avoid the risks of overstaffing or retrenchment and gain the flexibility to scale their team quickly to meet project or market conditions.

Another key trend that Lee Ling notes is the influx of candidates returning to Malaysia after job stints in China. “996” work schedules in China and the “neijuan” concept of intense competition with little reward have led to high rates of burnout and dissatisfaction. As a result, many professionals have returned home for a more relaxed lifestyle and affordable living costs. Communication norms in the country also help make for a healthier work-life balance.

However, recent growth forecasts have painted a gloomy outlook, which could lead to downsizing and layoffs. “Should tariffs continue to go up, businesses might shift their operations to regions with more favourable trade conditions or even relocate back to their home base entirely. This would exacerbate any ongoing restructuring,” Lee Ling cautions.

“As far as the hiring market goes, the influx of Chinese firms and diversification initiatives by global companies have created plenty of new job opportunities."

Strategic sourcing, logistics and sales roles on the rise

The Northern Region is home to many electronics, semiconductor and advanced manufacturing players. These industries have been hungry for skilled talent in strategic sourcing, and this demand shows no signs of abating in 2026. “Caught in the midst of global geopolitical tensions, businesses around the world have taken to an omni-sourcing approach where supply chains are now diverse and distributed. Competition is fierce for talent in this function as they play a key role in establishing an organisation’s supply chain and supplier diversification strategy,” relates Lee Ling. Proven experience with managing complex supply chains and vendor relationships is essential, but demand is even higher for candidates with digital and strategic capabilities.

Next, the growth of the region’s logistics sector will also contribute significantly to hiring volumes. Experienced candidates in supply chain management, warehousing, transportation planning and digital logistics technologies will be highly sought after in the market in the coming year.

Sales positions will also be in high demand in the hiring market next year. Already, Lee Ling observes that businesses are hiring business development professionals to secure new business, as well as key account managers to nurture existing clients. This comes as businesses look to diversify and reduce reliance on any single revenue stream amidst economic uncertainty.

“When it comes to skills, employers now expect candidates to showcase both technical competency and strong interpersonal skills,” she reveals. “Soft skills that form the hiring criteria include adaptability, communication, critical thinking and ethical judgment, and creativity in problem-solving, design and development.”

Growing careers that outlast AI

As AI sweeps across all industries, Lee Ling asserts that everyone in the workforce now has to provide added value to ward off the risk of redundancy. Human-centric competencies such as emotional intelligence, critical thinking, creativity, innovation, cross-cultural communication, and complex problem-solving will give professionals an edge in today’s job market. All professionals should also stay up to date with trends and technologies in their respective industries.

Within the Northern Region, Lee Ling sees the recruitment and talent acquisition field as at risk as AI automates resume screening, candidate matching, and even initial interviews. Professionals in this domain are advised to strengthen their capabilities in areas that incorporate human empathy and logical judgment. This includes providing a strong candidate experience or advising on employer branding and strategic workforce planning.

The threat of AI also extends to customer service roles, as chatbots and virtual assistants now handle routine queries more efficiently. Talents who take on these positions should instead focus on customer journey mapping, emotional intelligence, and managing complex escalations.

Transactional executives, such as those in Accounting & Finance, should also be on guard. As AI takes over tasks such as bookkeeping, invoice processing and compliance checks, industry professionals should look to grow in the areas of financial strategy, scenario planning and cross-functional collaboration.

Create a positive work environment for employees

Candidates are approaching job switches with great caution, evaluating a prospective company’s reputation, work culture and financial health before making a move. They often opt to stay put if a job offer does not present any clear improvement over their current role. With negative growth forecasts and layoffs on the horizon, many professionals are understandably choosing to stick with a secure work environment.

While salary remains an important factor in talent attraction and retention, Lee Ling believes that a healthy working environment – where employees feel safe, supported and empowered to do their best work – now matters just as much to candidates. “It’s not simply about work-life balance,” she explains. “Flexibility, excellent leadership, a culture that promotes physical and mental well-being, as well as growth and development pathways – these are all attributes that make up the type of organisations that ace employee engagement and loyalty.”

Companies should also note that the war for talent is set to heat up in the next year with the entrance of new, long-term investors in the medical technology sector. This industry tends to be perceived as stable, and it also appeals to candidates’ desire to contribute to society’s greater good.

Salaries rise

The growth of Chinese firms in the Northern Region will continue to stoke an already heated competition for talent. Even as these firms’ retention rates suggest misalignments with Malaysia’s work culture and expectations, they are willing to dole out premium offers to secure talent, driving up salaries across the market.

Find out more

Request access to our 2026 Salary Survey to benchmark salaries and to find out more about key hiring trends in the Northern Region industry in Malaysia.