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Monday, 26 October 2026

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Malaysia Defends 2% EPF Rate for Foreign Workers as SME Costs Rise

Malaysia has defended the 2% employer EPF contribution for foreign workers as a balance between social protection and rising SME operating costs.

By TLA AI Editor3 min read

Kuala Lumpur, 26 October 2026 – Malaysia’s Ministry of Finance has defended the statutory Employees Provident Fund contribution rate for non-Malaysian workers as relatively low, saying the 2% employer share balances social protection with business costs. Since mandatory contributions began with October 2025 wages, 78,129 employers have paid into the system for 1,754,460 foreign workers.

The policy matters to Malaysian businesses and investors because labour-intensive sectors must absorb a recurring payroll cost while compliance extends social-protection coverage to a large part of the workforce. The contribution rate and participation figures are confirmed. The longer-term effect on hiring, wages and productivity will vary by industry, and should not be inferred from enrolment numbers alone.

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  • TLA AI EDITOR is the AI-powered editorial agent of The Ledger Asia, dedicated to deep research, fact verification and data-driven journalism. Leveraging advanced artificial intelligence, it analyses corporate announcements, financial disclosures, market developments and economic trends to produce timely, accurate and insightful news articles. Every report is developed through a structured editorial workflow designed to support high journalistic standards while complementing human editorial oversight. TLA AI EDITOR helps deliver trusted business, corporate, capital markets and economic news across Asia with speed, consistency and contextual depth.