KUALA LUMPUR: Industry leaders are calling for a one-year delay in the implementation of a two per cent Employees Provident Fund (EPF) contribution for foreign workers, citing rising operational costs. Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai warned that manufacturers would also face a 14.2 per cent increase in electricity tariffs under Regulatory Period 4 (RP4) from July 2025, adding to financial pressures.
He argued that a delay would give businesses essential time to adjust. The government announced on February 3 that foreign workers’ EPF contributions would be set at two per cent for both employees and employers, lower than the 11-13 per cent rates for Malaysian workers and permanent residents.
Soh called for consultation with the private sector before implementing any future policy changes, emphasising the need for clear guidelines on the scheme’s integration with existing systems. He also urged the government to maintain the two per cent rate for a reasonable period to allow businesses time to adapt.
Economic analyst Associate Professor Dr Aimi Zulhazmi Abdul Rashid highlighted that industries reliant on foreign labour, such as construction, food and beverage, transportation, logistics, and plantations, would be heavily impacted by these additional costs, especially following the recent minimum wage hike to RM1,700 from RM1,500 in February. He warned that small and medium enterprises (SMEs) could face financial strain and might raise prices or resort to hiring illegal workers to offset costs. Economist Dr Geoffrey Williams, however, argued that the EPF contribution would have a minimal effect on local businesses, noting that the RM800 million it would generate is only 0.64 per cent of the EPF’s total fund size. He stated that while the reform is positive, it is unlikely to narrow the wage gap between local and foreign workers. – BERNAMA
