Federation of Malaysian Manufacturers Raises Concerns Over Mandatory EPF Contributions for Foreign Workers
Unexpected Announcement
The Federation of Malaysian Manufacturers (FMM) has expressed disappointment over the government’s "unexpected" announcement that all foreign workers would be required to contribute to Employees’ Provident Fund (EPF) from 2025. According to FMM president Soh Thian Lai, the government did not engage stakeholders prior to this announcement, leaving industry players feeling "disappointed and sidelined".
Lack of Clarity
Soh lamented the lack of clarity on the plan, saying this has caused great concern within the business community. "Industry players feel disappointed and sidelined, as they were not given the opportunity to provide input or voice their concerns on the potential impact of such a policy on business operations, costs and workforce management," he said.
Concerns Over Implementation
Soh suggested that the implementation of the policy should be delayed, preferably for another two years, to allow sufficient time for comprehensive stakeholder consultations and for businesses to adjust to the impending financial commitments. He emphasized that there has been no information on key aspects like the specific timeframe for implementation, who exactly would be covered under this rule, the contribution rates for both employers and foreign employees, or how the phased rollout will be managed.
Impact on Employers
Soh warned that the mandatory contributions for foreign workers would affect the operating costs and cash flow of employers, adding that this was an additional burden on top of the upcoming new RM1,700 minimum wage and multi-tier levy system. He believed that employers could not afford to make EPF contributions for migrant workers at the same 12%-13% rate that they do for Malaysian employees.
Impact on Migrant Workers
The FMM president highlighted that migrant workers may not be keen about contributing to EPF since it would reduce their take-home pay, the bulk of which is sent to their families back home. With 2.5 million foreign workers in the country, the EPF contribution on non-citizens would translate to an additional minimum annual payroll cost of RM6.6 billion.
Conclusion
In conclusion, the Federation of Malaysian Manufacturers has expressed concerns over the government’s decision to make it mandatory for foreign workers to contribute to EPF from 2025. The lack of clarity and sudden announcement have raised concerns among industry players, and the FMM is calling for a delay in the implementation of the policy to allow for further consultations and adjustments.
FAQs
- What is the Federation of Malaysian Manufacturers’ stance on mandatory EPF contributions for foreign workers?
The FMM is opposed to the policy, citing concerns over its impact on operating costs, cash flow, and take-home pay for migrant workers. - Why did the government announce the policy without consulting stakeholders?
The FMM president believes the government did not engage stakeholders prior to the announcement, leaving industry players feeling "disappointed and sidelined". - How will the implementation of the policy affect employers?
The policy will affect the operating costs and cash flow of employers, adding to the burden of the new minimum wage and multi-tier levy system. - What is the estimated annual cost of EPF contributions for foreign workers?
The FMM estimates that the EPF contribution on non-citizens would translate to an additional minimum annual payroll cost of RM6.6 billion.