Kuala lumpur: The implementation of a two per cent Employees Provident Fund (EPF) contribution rate for both employers and non-citizen employees is a fair and balanced step aimed at ensuring social justice while maintaining Malaysia's international reputation, according to Human Resources Minister Steven Sim. He emphasized that this move, effective from last month, aligns with international labour standards, including those set by the International Labour Organization (ILO), and is essential for upholding Malaysia's credibility in the global market.
According to BERNAMA News Agency, Sim highlighted three key benefits of the two per cent contribution scheme: reducing the outflow of foreign currency estimated at around RM1 billion annually, minimizing the risk of workers absconding from their employers, and creating an emergency savings fund for foreign workers during their stay in Malaysia. He clarified that this contribution is not a retirement scheme like that for local workers but a savings fund that can be withdrawn upon returning to their home countries or used for emergencies, including cases of death.
Sim noted that while the two per cent rate may seem small compared to the over 10 per cent contributed by Malaysian workers, it provides basic social protection for foreign employees. He made these remarks during the 'Morning Talk with the Human Resources Minister' session at the Tax Seminar on Budget 2026. Although the policy does not fall directly under his ministry, as the EPF is administered by the Ministry of Finance, Sim sought to correct public misconceptions about its purpose.
He stressed the policy's balance between economic and social objectives, indicating Malaysia's commitment to protecting workers' rights and ensuring ethical governance in managing its foreign labour market. Sim asserted that the initiative is fundamentally and legally aligned with international labour regulations and delivers immediate benefits to the country.
The one-day seminar was organized by Grant Thornton and saw the participation of more than 260 attendees.