GEORGE TOWN, Nov 3 — 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, said Human Resources Minister Steven Sim.
The move, which came into effect last month, is in line with international labour standards, including those set by the International Labour Organisation (ILO), and is essential to upholding Malaysia’s credibility in the global market.
He said that the two per cent contribution scheme provides three key benefits: reducing the outflow of foreign currency, estimated at around RM1 billion annually; minimising the risk of workers absconding from their employers; and creating an emergency savings fund for foreign workers while they are in Malaysia.
“This contribution is not a retirement scheme like that for local workers. It is a savings fund that can be withdrawn when they return to their home countries, and it can also be used for emergencies, including in cases of death.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 two per cent rate is fixed. While it may seem small compared to the over 10 per cent contributed by Malaysian workers, it at least provides basic social protection for foreign employees,” Sim said during the 'Morning Talk with the Human Resources Minister' session at the Tax Seminar on Budget 2026 today.
He added that although the policy does not fall directly under his ministry, as the Finance Ministry administers the EPF, he wished to correct public misconceptions about its purpose.
Sim said that the policy strikes a balance between economic and social objectives, while also signalling that Malaysia is committed to protecting workers’ rights and ensuring ethical governance in its management of its foreign labour market.
“Fundamentally, this is the right thing to do. Legally, it aligns with international labour regulations, and practically, it delivers immediate benefits to the country,” he said.
The one-day seminar was organised by Grant Thornton and attended by more than 260 participants.
