Reconsider mandatory EPF coverage for foreign workers, contractors tell govt

• “This translates to an additional financial burden of an estimated not less than RM110 million per month for the construction industry.”

KUALA LUMPUR (Oct 22): Master Builders Association Malaysia (MBAM) said it is opposed to the government's plan to introduce mandatory Employees Provident Fund (EPF) coverage for non-citizen workers.

While acknowledging the rationale behind safeguarding the retirement savings of foreign workers, the association said the proposal will have significant cost implications, especially for the construction sector.

“With approximately 500,000 legal foreign construction workers currently in Malaysia and the minimum wage set at RM1,700, employers would be required to contribute 13% to the EPF,” MBAM president Oliver HC Wee said in a statement on Monday. “This translates to an additional financial burden of an estimated not less than RM110 million per month for the construction industry.”

Stressing that the construction sector is facing rising material costs, labour shortages, and intense competition, Wee said the proposal could further increase operational expenses, affecting business sustainability.

“MBAM urges the government to defer and reconsider this proposal and explore alternative mechanisms that protect the interests of both foreign workers and employers without compromising the financial viability of the construction industry,” he said.

Besides MBAM, the Federation of Malaysian Manufacturers has also urged the government to delay by two years its plan to implement mandatory EPF coverage for foreign workers to allow sufficient time for stakeholder consultations.

The plan to make it compulsory for non-Malaysian workers to contribute to the EPF was announced by Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim when tabling Budget 2025 in Parliament last Friday. Anwar said the proposal would be implemented in phases.

EPF chief executive officer Ahmad Zulqarnain Onn, in a statement on Monday, said compulsory coverage for non-Malaysian workers is in line with the fund's efforts to ensure that all workers have access to social protection.
 
He said the initiative would provide greater fairness in the labour market by ensuring social protection for all workers, regardless of nationality, in line with international standards.

Looking to buy a home? Sign up for EdgeProp START and get exclusive rewards and vouchers for ANY home purchase in Malaysia (primary or subsale)!