Employers should not pay same EPF contribution for foreign workers, says MEF

PETALING JAYA: Employers should not be required to pay the same EPF contributions for foreign workers as they do for local employees, says the Malaysian Employers Federation (MEF).

Its president Datuk Dr Syed Hussain Syed Husman said that the cost of such a policy would be too high for employers, especially small and medium enterprises (SMEs).

Syed Hussain clarified that MEF does not oppose mandatory EPF contributions for foreign workers if it is self-paid, allowing them to save for their retirement.

However, he argued that imposing the same employer contribution rates as those for Malaysian workers would place an excessive financial burden on businesses.

“MEF has no issue if the contribution is made mandatory for foreign workers for self-paying as part of their retirement benefits when they retire.

“Our issue is employers cannot be made to pay EPF as done for locals. The cost is too high,” he said in a statement.

He suggested that a dedicated pension fund committee or the National Wages Consultative Council (Majlis Gaji Negara) should be tasked with studying the proposal in detail.

Currently, employers contribute RM5 per month for foreign workers who voluntarily choose to contribute to EPF.

If the proposed 13% contribution for foreign workers earning below RM5,000 per month is enforced, the cost to employers would increase drastically, he said.

“With approximately 2.5 million foreign workers in Malaysia, this would amount to RM552.5mil per month or RM6.63bil annually.

“The additional cost for expatriates would be around RM1.5bil per year, resulting in a total estimated additional burden of RM8.13bil annually for Malaysian businesses,” he said.

He said the Budget 2025 has already outlined increases in the minimum wage to RM1,700, coupled with other levies on foreign workers.

Syed Hussain warned that combining these increases with mandatory EPF contributions would raise the cost of doing business by about 46%, further straining employers’ cash flow.

Given these financial implications, he said MEF is advocating for broader consultations with stakeholders before any decision is made.

Syed Hussain stressed that a balanced approach is needed to avoid detrimental impacts on businesses, particularly SMEs.