FMM In The News: FMT, PETALING JAYA, February 3, 2025 -
The Federation of Malaysian Manufacturers has called on the government to maintain the proposed 2% mandatory Employees Provident Fund contribution rate for foreign workers to ensure business stability.
FMM president Soh Thian Lai said the 2% rate should be upheld for a “reasonable period” to provide cost certainty for businesses.
“Any future policy changes, including potential adjustments to the EPF contribution rate, should be undertaken in close consultation with the private sector, particularly industries reliant on foreign labour,” Soh said in a statement today.
“Clear guidelines should also be provided on the mechanics of the contribution scheme, its integration with existing social security schemes, and the potential for further refinements, to ensure transparency and a smooth transition for all stakeholders.”
Soh welcomed the lowered rate, saying FMM had previously raised concerns with EPF about the initial proposal, which would have increased costs for employers through higher contributions, rising operational expenses, and greater labour-related costs.
“The decision to reduce the contribution rate to 2% without compounding is a welcome relief and reflects the government’s responsiveness to industry concerns by striking a balance between worker welfare and business sustainability,” he said.
He said FMM remained committed to working with the government to ensure that policies affecting the manufacturing sector strike a balance between business growth and fair labour practices.
“We look forward to continued engagement with the relevant ministries to address any outstanding concerns and ensure a smooth implementation of the new EPF contribution structure,” he said.
Earlier today, Prime Minister Anwar Ibrahim announced that the government had proposed to implement a mandatory 2% EPF contribution rate on foreign workers.
Human resources minister Steven Sim said the 2% contribution rate applied to both employees and employers.
Previously, foreign workers could voluntarily opt to contribute to EPF at a rate of either 11%, for those aged below 60, or 5.5% for the rest. Employers contribute only RM5 under both schemes.
2% best option for now, says MEF
The Malaysian Employers Federation said while the 2% contribution rate will still affect business costs, it is the best option for now, especially for small businesses struggling with cash flow.
MEF president Syed Hussain Syed Husmane said the rate will help employers manage their increasing expenses, especially after the implementation of the new RM1,700 minimum wage, from RM1,500 previously.
He said a reduction in the employers’ contribution for foreign workers, also to 2%, will help businesses to keep their workers and avoid job cuts.