PETALING JAYA: Maintain the 2% Employees Provident Fund (EPF) contribution rate for foreign workers for a reasonable period to allow businesses to plan accordingly, says the Federation of Malaysian Manufacturers (FMM).
Its president Tan Sri Soh Thian Lai said it would also provide businesses with much-needed cost certainty and allow industries to adjust.
ALSO READ: Anwar: EPF contribution to be capped at 2% for foreign workers
“Additionally, any future policy changes, including potential adjustments to the contribution rate should be undertaken in close consultation with the private sector, especially industries reliant on foreign labour,” he said in a statement on Monday (Feb 3).
Soh said clear guidelines should also be provided on the mechanics of the contribution scheme, integration with existing social security schemes and the potential for further refinements.
He also welcomed the government’s decision to implement the reduced 2% EPF contribution rate for foreign workers, compared to the previously proposed rate announced when Budget 2025 was tabled last year.
Soh said FMM also previously engaged with EPF to voice concerns over the initial proposal, highlighting the cumulative cost increases faced by employers such as higher statutory contributions, escalating operational expenses, and rising labour related costs.
ALSO READ: Mandatory EPF contributions for foreign workers capped at 2%, says Sim
“The decision to reduce the contribution rate to 2% without compounding is a welcome relief and reflects the Government’s responsiveness to industry concerns by striking a balance between worker welfare and business sustainability.
“FMM remains committed to working closely with the government to ensure policies affecting the manufacturing sector are well-balanced, fostering both business growth and fair labour practices.
“We look forward to continued engagement with the relevant Ministries to address any outstanding concerns and ensure a smooth implementation of the new EPF contribution structure,” he said.
Earlier Monday, Prime Minister Datuk Seri Anwar Ibrahim said EPF contribution for foreign workers is to be capped at 2%, and must be implemented.
He said that the initial Cabinet proposal was at 12% but with the consideration of the business chambers, it was capped at 2%.
"When things are better, maybe we will increase to 4%, but for now we keep it at 2%," Anwar said during the ACCCIM Chinese New Year Reception 2025 on Monday.
