Land of opportunity: Foreign workers feel safe living in a multi-ethnic country like Malaysia. — CHAN BOON KAI/The Star
PETALING JAYA: Small and medium-sized firms (SMEs) are calling for a reduced 5% contribution rate for the 2.4 million foreign workers should the government proceed with making EPF contributions mandatory for such workers.
The SMEs and other industry groups also want stakeholder consultation before any legal enactment.
SME Malaysia president Chin Chee Seong raised concerns about proposed employee contribution rates and suggested a lower contribution of about 5%.
“However, we prefer no EPF for the workers because they are here for a short term. Some are just here for three to four years. How much can they keep?
“They might not be happy and might ask (the employer) to increase their salary,” he said when contacted.
Chin cited the financial burden the policy could impose on a factory with about 300 foreign workers, adding that it could cost about RM1mil in additional operational costs.
He said SMEs in the agriculture, business, development, construction and manufacturing sectors are still facing a shortage of workers.
Small and Medium Enterprises Association of Malaysia (Samenta) president Datuk William Ng also highlighted the financial strain that the new minimum wage policy for foreign workers would create.
“With the current 2.4 million number of foreign workers, and assuming we pay the newly revised minimum wage of RM1,700, we are removing RM6.4bil in liquidity annually from the industry.“This is a substantial amount and highly unwarranted given the tight business margin environment in which we operate.
“The costs of hiring foreign workers for semi-skilled and unskilled jobs are significantly higher than locals after factoring in the costs of bringing in the foreign workers, annual health inspections, housing and levies.
“There is no reason why businesses, including SMEs, would prefer foreign workers if we can hire local workers. There continues to be a severe talent crunch, especially in manual work which locals generally shun,” he said, urging the government to reconsider the EPF mandate.
Master Builders Association Malaysia (MBAM) president Oliver Wee Hiang Chyn, in calling for a review, said the government should “zero-ise” the employer portion of EPF contribution on foreign labour.
“If the government makes such a contribution compulsory, the only way is to add such additional costs onto our pricing. Under the current competitive market situation, contractors can’t afford to shoulder such extra costs. Ultimately, end users or project owners will have to pay for it,” he added.
Wee said the financial impact on the various sectors would be huge, with most construction workers drawing RM3,000 a month.Lim Ser Kwee, president of the Federation of Vegetable Farmers Associations, opposed the EPF contribution proposal for foreign workers, comparing the situation with neighbouring countries.
He noted that Singapore had removed the need for its foreign workers to pay the Central Provident Fund (CPF) contribution.
According to the website of the republic’s Manpower Ministry, employers paying the levy for their foreign workers there are not required to pay them CPF contributions.
Lim said Malaysia’s vegetable sector employs nearly 30,000 foreign workers, signifying the considerable scale at which the decision could affect the industry.
On Thursday, more than a dozen associations affiliated with the palm oil industry said the proposed mandatory EPF contributions for foreign workers will reduce their take-home pay, potentially affecting their financial obligations and motivation to work in Malaysia.
Under Budget 2025, it was proposed that employers contribute to the EPF for non-citizen employees. Specifics on the calculation of these rates based on salary were not provided.
