Malaysia's human resources minister on Thursday said Indonesia had agreed to lift a freeze on sending its migrant workers to the country effective August 1, after the neighbours ironed out concerns surrounding workers' rights.

The entry of migrant workers will help Malaysia - the world's second-largest palm oil producer and a key link in the global supply chain - ease a shortage of some 1.2 million workers.

Indonesia this month temporarily stopped sending its citizens to work in Malaysia, including thousands recruited for the plantation sector, citing a breach in an agreement aimed at improving the protection of domestic workers employed in Malaysian households.  

Jakarta agreed to resume sending its workers after both countries agreed to trial a single channel to facilitate the recruitment and entry of Indonesian workers, Malaysia's Human Resources Minister M. Saravanan said in a statement.

Indonesia's Manpower Ministry did not immediately respond to Reuters' request for comment.

Malaysia's immigration authorities had previously used an online recruitment system for domestic workers, but that had been linked to allegations of trafficking and forced labour.

Scrutiny over the treatment of migrant workers in Malaysia has been growing, with seven Malaysian companies banned by the United States in the last two years over what it described as "forced labour".

Malaysia relies on millions of foreign workers from countries like Indonesia, Bangladesh and Nepal to staff plantation and factory jobs.

But despite lifting a pandemic-induced freeze on recruitment in February, Malaysia has not yet seen a significant return of workers due to slow government approvals and protracted talks with source countries over employee protections.