KUALA LUMPUR – The Employees Provident Fund (EPF) contribution rate for foreign workers will be set at 2%.
Prime Minister Datuk Seri Anwar Ibrahim said that this rate will be maintained for a certain period until the country’s economic situation improves.
However, he did not specify how long the policy would remain in effect.
“The initial proposal was 12%, but the Cabinet has taken various considerations into account. Therefore, we have decided to keep it at 2% for now, and we will wait until the situation improves.
“At this point, we will maintain the 2% rate and continue with that decision. There is no concern about a gradual increase. Otherwise, we would certainly have raised it above 2%, but that is not the case,” he said during a speech at the Chinese New Year celebration organised by the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) in the capital today.
Previously, in his Budget 2025 presentation, Prime Minister Datuk Seri Anwar Ibrahim stated that the government is committed to providing fair treatment to all workers, regardless of nationality, in line with international standards.
He said the government plans to make it mandatory for all non-citizen workers to contribute to the EPF.
This proposal will be implemented in phases.
Earlier, the implementation of mandatory EPF contributions for foreign workers was suggested as a long-term measure to reduce the country’s reliance on foreign labour.
Dr Zouhair Rosli, Chief Researcher at DM Analytics, said it is proposed to start in 2027 with a 2% contribution from both employers and employees, gradually phased in.
He added that many countries, including both developing and developed nations, have already implemented similar policies.
India, for example, enforces an 11% contribution from both employers and employees, Thailand has a rate of around 5%, Australia’s rate is 12%, Germany’s is 9%, and France has one of the highest at 18%.
Meanwhile, in line Anwar announcement during the 2025 Budget speech in the Dewan Rakyat on October 18, 2024, Human Resources Minister Steven Sim Chee Keong said the implementation of mandatory EPF contributions for foreign workers is proposed at 2%, with a matching 2% contribution from employers.
“This rate will be maintained until a future review, considering the current situation,” he said. “Further details on the mandatory contribution will be clarified in the Cabinet meeting. Subsequently, a bill to amend the Employees Provident Fund Act 1991 is expected to be tabled in the Dewan Rakyat during this session,” Sim said in a statement.
This move aims to enhance fairness in the labour market by ensuring social protection for all workers, in line with international standards, such as Article 68 of the International Labour Organization’s (ILO) Convention 102, which guarantees equal social protection rights for non-citizens. – February 3, 2025