Image credit: The Malaysian Reserve
KUALA LUMPUR: The government has assured that the proposed two per cent Employees Provident Fund (EPF) contribution for foreign workers will not burden employers or shift the fund's primary focus on local workers retirement savings.
Prime Minister Datuk Seri Anwar Ibrahim said both EPF and the Finance Ministry have engaged with major corporations and small and medium-sized enterprises (SMEs) to discuss the policy.
"We are also bound by international standards, including Article 68 of Convention 112 of the International Labour Organization (ILO).
"Nearly 70 countries implement similar contribution schemes, with most setting higher contribution rates.
"However, we have opted for a minimum two per cent contribution, as this rate will not impose a burden. At the same time, it does not divert EPF's focus from local citizens (retirement savings)," he said in Prime Minister's Question time in Dewan Rakyat today.
Chiew Choon Man (PH–Miri) asked regarding EPF's contributions for non-citizens and whether this proposal will burden employers and divert the EPF's attention from its specific focus on citizens retirement savings.
Anwar said the contribution scheme serves multiple purposes, including safeguarding the interests of local workers by ensuring job opportunities in the country and reducing dependence on foreign labour.
"The contribution scheme is designed to protect the interests of local workers. In my view, it is unreasonable to continue relying excessively on foreign labour.
"If hiring foreign workers is necessary under the current circumstances, they should be subject to the same methods and systems as local workers, including making EPF contributions, even at a minimum rate.
"Otherwise, there would be no incentive to prioritise hiring local workers, as employers would opt for the easier route of hiring foreign labour," he said.
Anwar said the scheme also ensures a mandatory contribution, allowing the government to register the total number of foreign workers.
"Secondly, it utilises financial institutions, including the EPF and the banking system (in the process).
"Thirdly, it ensures that these savings remain secure and encourages foreign workers to withdraw them once their service period and work permits in Malaysia end," he said.
As an example of the government's commitment to local workers, Anwar highlighted the introduction of the Voluntary Contribution scheme in 2024 for self-employed individuals, which has already attracted 1.2 million contributors.
He added that initiatives such as i-Saraan and i-Suri protect informal sector workers, including housewives, with incentives under these schemes amounting to RM4.16 million.
Source: https://www.nst.com.my/news/nation/2025/03/1183378/updated-anwar-epf-contribution-foreign-workers-will-not-hurt-employers