FMM In The News: THE MALAYSIAN RESERVE, May 2, 2023 - The Federation of Malaysian Manufacturers (FMM) is not in favour of the call to increase the employers’ Employees Provident Fund (EPF) contribution as a means to boosting employees’ retirement savings, especially during this current challenging economic period where the economic outlook is uncertain once again and global growth remains fragile.
Its president Tan Sri Datuk Soh Thian Lai said mandating all employers a higher contribution rate would be detrimental, especially for the small and medium-sized enterprises (SMEs) that make up 97% of businesses
He said based on the FMM Business Conditions Survey 2H2022 conducted from January 18 to February 28, 2023 there was an expectation for sales to slowdown in the first six months of 2023 on both the local and external fronts.
From the same survey, FMM members were also asked about their risks to business recovery and growth in 2023 within the global and domestic economies, of which the top three were, input cost pressures, higher energy cost (including gas and electricity) and fluctuations in the Ringgit.
“The industry is of the view that the focus of the Government at this point of time should be on short-term and immediate initiatives for workers to have more money in their pockets and to improve the purchasing power of the rakyat amidst the continued price pressures that impact everyone.
“The Government’s focus should be on keeping the cost and standard of living of the rakyat manageable as well as ensuring a positive economic growth trajectory which would provide a conducive environment for businesses to increase their profits and improve their cashflow which would then be able to support better wages and benefits for their employees,” Soh sid.
Under the current EPF schedule of contribution, the employer’s contribution is at 13% for those earning RM5,000 and below and 12% for those earning above RM5,000.
In addition, SOH said the monetary value of the employer’s contribution does not remain stagnant but increases yearly based on wage adjustments in tandem with the changes to the Consumer Price Index.
While the statutory contribution rates for employers are fixed, he noted that employers have the discretion to contribute a higher percentage based on their respective human resource and talent retention strategies where their contribution is tax-deductible up to 19% of the employee’s pay.
“Hence, mandating all employers a higher contribution rate would be detrimental, especially for the SMEs that make up 97% of businesses,” said Soh.
In addition, he said FMM believes that with EPF’s strong governance structure and continued prudent and good investment practices, that has produced enhanced returns, it will continue to further strengthen and enrich the retirement savings of its members.
“The current conditions of deduction and contributions towards the retirement savings for the EPF members are also very sound in meeting the future needs.
“Last but not least, FMM would like to reiterate that any proposal and/or policy change that would have a direct cost impact on businesses must be done with full consultation with all relevant stakeholders,” Soh stated. – TMR