PETALING JAYA: The government has been urged to maintain the 2% mandatory Employees Provident Fund (EPF) contribution rate for foreign workers for a reasonable period.
Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai said this will allow businesses to plan accordingly.
“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.
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 with the previously proposed rate of 12% announced in Budget 2025 last year.
“This decision is a welcome relief and reflects the government’s responsiveness to industry concerns by striking a balance between worker welfare and business sustainability,” he said.
Soh also said that 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.
SME Malaysia president Chin Chee Seong said he is concerned that many small and medium enterprises (SMEs) will be struggling to cope with the additional costs.
Chin questioned whether the increase would provide any real benefit to businesses, workers, or the country as a whole.
He said that while the contribution for interns stands at 12%, even a 2% increase for foreign workers could have a significant financial impact on businesses.
“Many ask me; I say 2% seems small, but it’s a large figure when you add it all together,” he said.
Meanwhile, the Malaysia Budget and Business Hotel Association (MyBHA) has welcomed the government’s decision to implement a lower EPF contribution rate of 2% for foreign workers.
“This move is seen as a progressive effort to support the resilience of local businesses, particularly in the hospitality sector, amidst rising operating costs,” said its president Dr Sri Ganesh Michiel.
“However, MyBHA urges the government to ensure that this policy is followed by strict enforcement against the short-term rental accommodation (STRA) providers that often employ foreign workers without complying with labour laws and regulations.“This issue has created unfair competition within the hospitality sector and significant challenges for licensed service providers that adhere to regulations,” he said.
He urged the government to take firm action against STRA providers who employ foreign workers without adhering to labour and safety regulations.
Malay Chamber of Commerce Malaysia president Norsyahrin Hamidon described the EPF contribution for foreign workers as a beneficial move.
“It will also increase EPF’s coffers so they have more to invest in strategic sectors, and the foreign workers’ welfare is presumed better taken care of,” he said.
However, Norsyahrin acknowledged that the decision may not sit well with all employers.
“It may face backlash from certain employers,” he added.
Kuala Lumpur and Selangor Indian Chamber of Commerce and Industry president Nivas Ragavan said he is uncertain where the 2% EPF contribution will be channelled to as foreign workers are already well protected under PERKESO.
