Delay migrant workers' EPF contribution plan by 2 years - group

• UPDATED 10.08PM | Added Master Builders’ Association’s comments.

BUDGET 2025 | Several groups have urged the government to postpone getting migrant workers to contribute to the Employees Provident Fund (EPF).

Federation of Malaysian Manufacturers president Soh Thian Lai said the announcement was unexpected, that stakeholders were not consulted, and that the proposal should be postponed for at least two years.

“While the announcement suggests that the implementation will occur in phases, critical details remain unclear.

“This lack of clarity has caused significant concern within the business community because no prior stakeholder consultations were held before this major policy shift was revealed.

“Implementation should be delayed, preferably for another two years, to allow sufficient time for comprehensive stakeholder consultations and for businesses to adjust to the impending financial commitments,” he said in a statement today.

When tabling Budget 2025 at the Dewan Rakyat last Friday, Prime Minister Anwar Ibrahim announced that the government is looking into getting migrant workers to contribute to the private sector retirement fund.

He also announced that the minimum wage would be hiked from RM1,500 to RM1,700 come Feb 1, 2025.

Costs will escalate

Expressing disappointment over the matter, Soh said the policy would affect the industry, including business operations, costs and workforce management.

“The absence of engagement with businesses before the announcement has left the industry unprepared for this significant change.

“There has been no information provided about key aspects such as the specific timeline for implementation, who exactly will be covered under this mandate, the contribution rates for both employers and non-citizen employees, or how the phased rollout will be managed.

“This has heightened the uncertainty within the industry as they await more detailed information on how the policy will be implemented,” he added.

Multiple changes

The announcement also came at a challenging time, Soh said, noting the impending hike in the minimum wage and the expected implementation of the multi-tier levy mechanism next year.

“Details have yet to be made (on the multi-layer levy) but it is also expected to lead to a significant cost increase.”

As for the social safety net for migrant workers, Soh said the Social Security Organisation is already providing sufficient protection.

He also said that EPF contribution, which is a long-term retirement fund for workers, may not align with migrant workers’ short-term working tenure arrangement.

“This would reduce migrant workers’ take-home pay, which could be a cause for concern to them as they typically send a substantial portion of their earnings back home to support their families,” he added.

Meanwhile, Free Malaysia Today quoted the Master Builders’ Association Malaysia president, Oliver Wee, warning the proposal could cost no less than RM110 million per month for the construction industry, especially with the increase in minimum wage.

“The construction sector, which is already facing rising material costs, labour shortages and intense competition, cannot absorb such a massive increase in operational expenses without affecting business sustainability,” he was quoted as saying.

Wee reportedly urged the government to defer implementation of the proposal until better arrangements can be made that can protect the interests of migrant workers without compromising the financial viability of the construction industry.

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