Mandatory EPF contributions for foreign workers

The Dewan Rakyat has passed amendments to the Employees Provident Fund (EPF) Act 1991, making EPF contributions mandatory for foreign workers starting in the fourth quarter of 2025.

Both employers and foreign employees will contribute 2% of monthly wages, a rate lower than the 11% employee and 12%–13% employer contributions required for Malaysian workers.

This policy aims to correct wage imbalances, encouraging employers to hire more Malaysians and reducing reliance on low-skilled foreign labor.

It also seeks to curb undocumented employment, as only legally registered foreign workers will be eligible to contribute.

Additionally, channeling a portion of foreign workers’ earnings into EPF savings is expected to reduce capital outflows and strengthen the ringgit.

The government plans to streamline foreign worker EPF registration through automated integration with Immigration Department databases and online platforms to facilitate seamless compliance.

This initiative aligns with Malaysia’s aspirations to become a high-income nation by fostering a fair labor market and supporting sustainable wage growth.

Read more in The Edge Malaysia

Parliament approves mandatory EPF contribution for foreign workers, implementation likely in 4Q2025