The 2% EPF contribution for foreign workers provides social protection, reduces currency outflow and aligns with international labour standards.
GEORGE TOWN: The implementation of a 2% Employees Provident Fund contribution rate for both employers and non-citizen employees represents a fair and balanced approach to social justice.
Human Resources Minister Steven Sim said this policy aligns with international labour standards, including those set by the International Labour Organization.
He emphasised that maintaining Malaysia’s international reputation and credibility in the global market remains essential.
The contribution scheme provides three key benefits according to the minister.
It reduces foreign currency outflow estimated at approximately RM1 billion annually.
The policy also minimises the risk of workers absconding from their employers.
Additionally, it creates an emergency savings fund for foreign workers during their stay in Malaysia.
“This contribution is not a retirement scheme like that for local workers,” Sim explained.
“It is a savings fund that can be withdrawn when they return to their home countries, and it can also be used for emergencies, including in cases of death.”
The minister noted that while the 2% rate appears small compared to Malaysian workers’ contributions exceeding 10%, it provides basic social protection.
Sim clarified that although the policy falls under the Ministry of Finance’s administration, he wanted to address public misconceptions.
He stressed that the policy balances economic and social objectives effectively.
“Fundamentally, this is the right thing to do,” Sim stated.
“Legally, it aligns with international labour regulations, and practically, it delivers immediate benefits to the country.”
The minister made these comments during the ‘Morning Talk with the Human Resources Minister’ session at the Tax Seminar on Budget 2026.
The one-day seminar was organised by Grant Thornton and attended by more than 260 participants. – Bernama
