KUALA LUMPUR: Micro, small, and medium enterprises (MSMEs) may be forced to cease operations due to financial pressure from the requirement to contribute to the Employees Provident Fund (EPF) for foreign workers.
Malaysian Employers Federation (MEF) president, Datuk Dr Syed Hussain Syed Husman, said that employers would face an additional cost of RM8.13 billion per year to cover EPF contributions for the 2.5 million foreign workers in the country.
"For employers contributing 13 per cent EPF for employees earning up to RM5,000 monthly, covering 2.5 million foreign workers, the added cost is RM552.5 million per month, or RM6.63 billion annually.
"Foreign workers also include expatriates, and according to 2023 data, there were 154,155 expatriates in Malaysia, with an average monthly salary of RM6,610.
"This would result in an estimated RM122.24 million in mandatory EPF contributions monthly, or RM1.5 billion annually," he said, adding that MSMEs are already struggling with high operational costs.
Syed Hussain said that employers would also face a 46 per cent increase in costs due to the rise in the minimum wage from RM1,500 to RM1,700, as well as higher levy charges and EPF contributions.
On Oct 18, Finance Minister Datuk Seri Anwar Ibrahim announced during the 2025 Budget presentation that the government plans to mandate EPF contributions for non-citizen workers.
However, Syed Hussain said that MEF was not previously consulted on the decision to include foreign workers in EPF contributions.
He said that stakeholder discussions and negotiations are essential before implementing this decision, as high operational costs could deter both local and foreign investors.
He urged the government to postpone the proposal, noting that more studies are necessary to mitigate the potential impact of including foreign workers in EPF contributions.