Article 15: EPF Contributions for Foreign Workers Set at 2%
Kuala Lumpur, March 6 – The Malaysian government has made it mandatory for foreign workers to contribute to the Employees Provident Fund (EPF) under recent amendments to the EPF Act 1991. The policy, which will take effect in the fourth quarter of 2025, aims to ensure fair employment practices and reduce labour cost imbalances between local and foreign workers.
Under the revised scheme, employers must contribute 2% of a foreign worker’s salary to EPF, while the employees themselves will also contribute 2%. This is significantly lower than the 11% employee contribution and 12%–13% employer contribution required for Malaysian workers. Finance Minister II Datuk Seri Amir Hamzah Azizan stated that this approach helps balance employment costs while keeping expenses manageable for employers.
The government hopes this move will address wage distortions and encourage the hiring of local workers. “Without compulsory EPF contributions, foreign workers’ employment costs are significantly lower than those of local workers. This [new] policy will correct that imbalance and incentivise employers to hire more Malaysians,” Amir explained during the parliamentary debate.
Currently, EPF contributions for foreign workers are voluntary, with only 22,635 workers, or 0.9% of the estimated 2.5 million foreign workers, actively contributing as of December 2024. To enhance compliance, the government plans to integrate foreign worker EPF registration with the Immigration Department’s databases and online platforms.
Experts believe that making EPF contributions compulsory will not only promote fair labour practices but also curb undocumented employment by ensuring that only legally registered workers participate in the scheme. The policy reflects the government’s broader efforts to create a more equitable and competitive job market for Malaysians.
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Source of news: https://theedgemalaysia.com/node/747048
Under the revised scheme, employers must contribute 2% of a foreign worker’s salary to EPF, while the employees themselves will also contribute 2%. This is significantly lower than the 11% employee contribution and 12%–13% employer contribution required for Malaysian workers. Finance Minister II Datuk Seri Amir Hamzah Azizan stated that this approach helps balance employment costs while keeping expenses manageable for employers.
The government hopes this move will address wage distortions and encourage the hiring of local workers. “Without compulsory EPF contributions, foreign workers’ employment costs are significantly lower than those of local workers. This [new] policy will correct that imbalance and incentivise employers to hire more Malaysians,” Amir explained during the parliamentary debate.
Currently, EPF contributions for foreign workers are voluntary, with only 22,635 workers, or 0.9% of the estimated 2.5 million foreign workers, actively contributing as of December 2024. To enhance compliance, the government plans to integrate foreign worker EPF registration with the Immigration Department’s databases and online platforms.
Experts believe that making EPF contributions compulsory will not only promote fair labour practices but also curb undocumented employment by ensuring that only legally registered workers participate in the scheme. The policy reflects the government’s broader efforts to create a more equitable and competitive job market for Malaysians.
Ready to expand your business hassle-free? Contact Alena Consultancy & Services today to learn more about our HR and payroll outsourcing services and how we can support your workforce needs!
+60183755170 / hello@alena.com.my / www.alena.com.my
Source of news: https://theedgemalaysia.com/node/747048
08 Apr 2025
