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Ahmadul Kobir, Malaysia: Malaysia has reaffirmed its commitment to maintaining the mandatory 2 per cent employer contribution to the Employees Provident Fund (EPF) for foreign workers, with 78,129 employers having started contributions for more than 1.75 million migrant workers.
The government says the policy aims to strengthen retirement savings and social protection for foreign workers while keeping the additional financial burden on employers manageable.
Malaysian Prime Minister and Finance Minister Anwar Ibrahim described the 2 per cent contribution rate, which took effect in October 2025, as relatively low. He said the measure formed part of the government’s broader efforts to extend social protection to foreign workers, who make a significant contribution to the country’s economy.
According to Anwar, the policy seeks to ensure that workers in Malaysia receive social protection regardless of nationality, provide migrant workers with basic retirement savings and promote fairness and inclusivity within the national retirement savings system.
Figures provided by the finance minister show that 78,129 employers have begun making the mandatory contributions for 1,754,460 foreign workers. Of these employers, 67,194, or approximately 86 per cent, are small and medium-sized enterprises (SMEs).
Under Malaysia’s classification, manufacturing companies with up to 200 employees and businesses in the services and other sectors with 75 employees or fewer are considered SMEs.
Anwar said the participation of a large number of employers, including SMEs, indicated growing acceptance of the contribution requirement.
He added that the government remained open to proposals from stakeholders to improve the policy. Its effectiveness would continue to be monitored, while engagement with the SME sector would be maintained to ensure that assistance reached businesses requiring support.
Anwar was responding to a question from Jimmy Puah, a member of parliament for Tebrau representing the People’s Justice Party (PKR), who asked whether the Finance Ministry was considering reviewing the mandatory EPF contribution for foreign workers.
In July, Deputy Prime Minister Ahmad Zahid Hamidi said the government had agreed to review the requirement in response to concerns raised by businesses over the additional costs.
However, in his latest remarks, Anwar defended the existing 2 per cent rate, citing its relatively low level and the importance of extending retirement protection to foreign workers.
The policy has drawn attention to the challenge of balancing workers’ welfare with employers’ operating costs, particularly among SMEs, which account for the vast majority of employers currently making contributions under the scheme.
For migrant workers, the mandatory contributions provide a mechanism to accumulate retirement savings during their employment in Malaysia. For employers, the requirement represents an additional labour cost, although the contribution rate remains limited to 2 per cent.
The government says it will continue monitoring the policy and consulting stakeholders as it seeks to maintain social protection for foreign workers without placing undue pressure on businesses.