The Finance Ministry says the 2% EPF contribution for foreign workers is relatively low, balancing worker protection with employer costs, including for SMEs.
KUALA LUMPUR: The two per cent Employees Provident Fund (EPF) contribution rate payable by employers for non-Malaysian workers is relatively low, the Finance Ministry (MOF) said.
The ministry said the rate takes into account the need to balance workers’ social protection objectives with the costs borne by employers.
“The government recognises the challenges employers face from rising business costs, particularly small and medium enterprises (SMEs).
“Under the Employees Provident Fund Act 1991, all employers have been required to contribute to the EPF for non-Malaysian workers employed in Malaysia since October 2025,” the ministry said in a written parliamentary reply published on Parliament’s website yesterday.
The ministry was responding to a question from Jimmy Puah Wee Tse (PH-Tebrau) on measures to ease the burden on SMEs amid rising business costs, including whether the government would consider requiring foreign workers to bear the full cost of EPF contributions.
Since mandatory contributions were introduced in October 2025, a total of 78,129 employers have contributed to the EPF for 1,754,460 non-Malaysian workers, the ministry said.
“Of these employers, 86 per cent, or 67,194, were SMEs, defined as businesses with no more than 200 employees in the manufacturing sector and no more than 75 employees in the services and other sectors.
“This indicates that the mandatory contribution requirement has begun to gain acceptance and is being implemented by employers, including SMEs,” it said.
The ministry said mandatory EPF contributions formed part of the government’s efforts to expand social protection coverage to all workers in Malaysia, in line with international practices.
It added that the government remained open to proposals from all parties to improve policies over time.
“The government will continue to monitor the effectiveness of these initiatives and engage with SME associations and communities to ensure that assistance reaches businesses in need,” it said.