(AFP) The government may exempt foreign workers from contributing to the state retirement fund due to administrative problems, it was reported today.

The Employees Provident Fund (EPF) has proposed to the goverment that foreigners are left out of the scheme as it is overburdened with having to process withdrawals from those working here for a short period, said chairman Abdul Halim Ali.

"That poses administrative difficulties for EPF and it is not worth the trouble," he was quoted as saying in a newspaper today.

Foreign workers earning below RM2,500 ringgit are required to contribute 11 percent of their salary to EPF every month under a 1998 ruling aimed at reducing foreign exchange outflow amid a recession.

Employers pay RM5 ringgit to the fund for each foreign worker.

The ruling is optional for domestic maids and expatriates.

Discourage recruitment

The government in April reduced the rate of statutory contribution for all EPF contributors from 11 to nine percent.

The EPF, a fund to which both workers and bosses must subscribe, has some 9.7 million contributors. It had resources of more than RM168 billion as of end-1999.

If the EPF proposal is approved by the government, some 600,000 foreigners currently working in the country will no longer need to contribute to the fund.

The proposal was welcomed by the Malaysian Employees Federation but met with opposition from the Malaysian Trades Union Congress (MTUC).

The MTUC, which represents some 550,000 local workers, said such a move would indirectly encourage the recruitment of more foreign workers at the expense of Malaysians.

Malaysia is home to some 700,000 legal workers mainly from neighbouring Indonesia, as well as tens of thousands of illegal immigrants.