Kuala Lumpur, February 3, 2025 – The Federation of Malaysian Manufacturers (FMM) has expressed its support for the government’s decision to implement a 2% Employees Provident Fund (EPF) contribution rate for foreign workers. This adjustment marks a reduction from the previously proposed rate announced during the Budget 2025 tabling in October 2024, which included a series of annual increments over the next six years.
FMM had actively engaged with the Employees Provident Fund (EPF) to address concerns regarding the initial proposal. The federation had highlighted the significant cost burden on employers due to higher statutory contributions, rising operational expenses, and increased labour-related costs. The government’s decision to reduce the contribution rate to 2%, without additional yearly increments, offers much-needed relief and demonstrates the government’s responsiveness to the challenges faced by businesses. The revised approach ensures a balance between promoting worker welfare and maintaining business sustainability.
While welcoming the reduction, FMM emphasizes the importance of maintaining the 2% contribution rate for a reasonable period to provide businesses with the necessary cost certainty. This stability will enable industries to better plan and adjust their operations. The Federation further urges the government to consult with the private sector—especially industries that depend heavily on foreign labour—before making any future adjustments to the contribution rate. Clear guidelines on the integration of the contribution scheme with existing social security programs and potential future changes are also needed to ensure transparency and a seamless transition for all stakeholders involved.
FMM remains dedicated to collaborating with the government to ensure that policies affecting the manufacturing sector are well-balanced, supporting both business growth and fair labour practices. The Federation looks forward to continued discussions with relevant ministries to address any outstanding concerns and to ensure the effective implementation of the new EPF contribution structure.
