PETALING JAYA: The government should reconsider its decision to mandate a 2% Employees Provident Fund (EPF) contribution for foreign workers, say palm oil industry players.
The group of 13 business associations affiliated with the palm oil supply chain said that while the 2% contribution may seem minimal, with an estimated 336,500 foreign workers employed in the plantation sector, the industry would collectively bear an additional cost of approximately RM137mil annually.
"Given the financial pressures already faced by the sector, we seek reconsideration of this policy to ensure that it does not inadvertently burden employers or foreign workers," said the group in a statement on Feb 4.
The group added that the Malaysian palm oil sector relied heavily on foreign labour, particularly for fieldwork, due to the persistent shortage of local workers.
"The introduction of mandatory EPF contributions adds new financial and administrative challenges, particularly for plantation companies already managing fluctuating global markets, sustainability compliance, and rising operational costs," it said.
The group also said that the high turnover rate of foreign workers in the industry posed significant administrative burdens.
"Many foreign workers do not stay in Malaysia for extended periods, making long-term savings through EPF less relevant for them.
"Managing these contributions for a transient workforce requires additional resources, which could divert focus from productivity and sustainability initiatives," the group said.
The associations also said that the new policy went against the EPF's primary design of long-term retirement savings and may not align with the financial needs of foreign workers.
"Most foreign workers are in Malaysia for a short-term employment cycle of two to four years and prioritize sending their earnings home to support their families.
"A mandatory EPF contribution reduces their take-home pay, which could discourage them from choosing Malaysia as a preferred employment destination," it said.
The group said that while it acknowledged the government’s intent to enhance worker welfare, it was essential to implement policies that were both fair and practical.
"We remain committed to collaborating with the government and relevant stakeholders to develop a balanced approach that ensures the continued growth of Malaysia’s palm oil sector while safeguarding the well-being of its workforce," it said.
The 13 associations are listed below.
1. Malaysian Palm Oil Association (MPOA)
2. Malaysian Estate Owners’ Association (MEOA)
3. East Malaysian Planters Association (Empa)
4. Sabah Employers Consultative Association (Seca)
5. Sarawak Oil Palm Plantation Owners Association (Soppoa)
6. Sarawak Dayak Oil Palm Planters Association (Doppa)
7. Palm Oil Millers Association (Poma)
8. Malayan Edible Oil Manufacturers’ Association (Meoma)
9. Incorporated Society of Planters (ISP)
10. Palm Oil Refiners Association of Malaysia (Poram)
11. National Association of Smallholders (NASH)
12. Malaysian Oleochemical Manufacturers Group (MOMG)
13. Malaysian Biodiesel Association (MBA)
