PETALING JAYA: Delay the implementation of the Employees Provident Fund (EPF) contribution scheme for foreign workers, business players said, citing concerns about the financial burden it would impose on companies.
Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai said the contribution rate, if set at the same level as local workers, would be too high and could strain employers.
“Imposing EPF contributions of 12% to 13% for foreign workers would place an enormous financial burden on employers, especially in industries heavily reliant on foreign labour,” said Soh in a statement yesterday.
He said the minimum wage hike to RM1,700 combined with the planned implementation of EPF contributions for foreign workers announced under Budget 2025 present challenging financial burdens for businesses.
These measures, he said, could severely impact operating costs, especially for companies heavily reliant on foreign labour.
Soh said that the escalating labour expenses could threaten the sustainability of many businesses, particularly small and medium-sized enterprises (SMEs).
Breaking down the figures, Soh said that with 2.5 million foreign workers in the country, the EPF contribution alone would translate to RM1,700 per worker annually, multiplied by 13%, adding RM6.6bil to employers’ payroll costs.
Combined with the upcoming minimum wage hike, which will add RM10.8bil to total payroll expenses, businesses could face an additional annual financial burden of RM17.4bil.
Soh urged the government to provide clear details on the scheme, including contribution rates, coverage, and phased implementation timeline.
He said that the lack of clarity is causing significant concern in the business community, which is already struggling with increasing labour costs and upcoming regulatory changes.
Soh also said that the mandatory EPF contributions, combined with other labour-related expenses such as the minimum wage hike and the multitier levy mechanism, could jeopardise the sustainability of SMEs in particular.
“This new financial burden comes at a challenging time for businesses, and the uncertainty only adds to their struggles,” he said. The FMM president also called for immediate engagement with stakeholders to address these concerns and ensure that the policies are practical and sustainable for businesses.
Malay Businessmen and Industrialists Association of Malaysia (Perdasama) called for the EPF contribution scheme for foreign workers to be implemented in phases.
Its president Mohd Azamanizam Baharon said many SMEs are not in favour of the scheme, as they are already grappling with financial challenges.
“I would ask for this scheme to be implemented in phases. For the beginning part, perhaps the EPF contribution should only come out of the foreign workers’ pay cheque,” said Mohd Azamanizam.
He argued that employers should not be burdened with additional contributions as many businesses are already struggling to meet EPF obligations for their Malaysian workers.
“A lot of businesses are finding it difficult to pay the EPF contribution for Malaysian workers even,” he said.
Mohd Azamanizam also said that foreign workers often return to their home countries with their EPF savings, which does not contribute to the Malaysian economy.
“When these foreign workers go back, they take all the money back with them. There is no point for Malaysian employers to pay their EPF contribution, at least not when our businesses are struggling,” he said.
Indonesian Migrant Domestic Workers Association (Pertimig) advisor Asri Paidin, when contacted, said foreign domestic workers in Malaysia must contribute to the EPF at the same rate as Malaysian workers.
She said any difference in contribution rates would be discriminatory. “The contribution rate should be the same, otherwise it means discrimination is being practised,” she said.
