While social protection for Malaysians is relatively well-established through provident funds, social insurance schemes, and government assistance programs, coverage for non-citizen workers has historically been limited, fragmented or inconsistent across schemes, despite the nation’s reliance on this workforce.

As of March 2025, non-citizen workers accounted for about 13% of Malaysia’s 17.23 million national workforce, according to the Department of Statistics, with nearly three-quarters involved in labour-intensive sectors - manufacturing, construction and services.

Close to 80% originate from Bangladesh, Indonesia and Nepal – reflecting Malaysia’s reliance on regional labour migration, and many are employed in “3D” jobs — dirty, dangerous and difficult — leaving them at higher risk of injuries, chronic illness and old-age poverty without adequate protection.

The social support for non-citizen workers has been improving in recent years. In 2019, PERKESO extended employment injury coverage to non-citizens, as well as invalidity protection in 2024.

Meanwhile, public healthcare services including outpatient, specialist and inpatient care were made accessible in 2015 at affordable albeit slightly higher rates.

In its ongoing commitment to improve the social welfare of non-citizen workers, Malaysia will enforce mandatory Employees Provident Fund (EPF) contributions for non-Malaysian employees, effective from the contribution month of November.

Under this new policy, both employers and employees are required to contribute 2% of monthly wages.

While the joint 4% contribution at the RM1,700 minimum wage (amounting to RM68 a month) may seem modest, it provides a steadily growing retirement cushion when compounded with EPF dividends.

Non-citizen workers (excluding domestic workers) covered by this reform are those who hold a valid passport, possess an employment-related pass issued by Malaysia’s Immigration Department, and receive wages in monetary form.

Extending EPF coverage gives these workers a safety net, ensuring they are not left behind during crises and enabling them to recover with greater security and resilience.

Non-Malaysian contributors will also have access to EPF’s core benefits, including retirement savings, partial withdrawals for housing, health, and education, as well as full withdrawal upon leaving Malaysia.

Along with annual dividends, the option to elect Simpanan Shariah and the ability to transfer savings between their EPF accounts, the 2% employee contribution qualifies for personal tax relief of up to RM4,000 annually.

For employers, the 2% EPF contribution is deductible as a business expense under the Malaysian Income Tax Act 1967, similar to contributions made for Malaysian workers.

From the labour market perspective, the policy narrows the cost gap between foreign and local workers, encouraging employers to prioritise productivity and fairer wages.

The requirement also encourages formal employment as it is only eligible for legally documented workers, which aims to mitigate the use of undocumented labour, while promoting stronger governance and workplace protections.

From a social standpoint, the reform affirms Malaysia’s recognition of migrant workers’ contributions and rights to financial security, aligning the nation with international labour standards that increasingly require pension contributions for migrant workers.

This progressive reform underscores Malaysia’s determination to extend comprehensive and equitable social protection to all workers, regardless of nationality, demonstrating its resolve to build a fair, robust and enduring economy.

As host of the upcoming World Social Security Forum 2025 (WSSF 2025), the nation will showcase this policy as part of a social protection system designed for all contributors to the country’s economy.

The forum is also a timely platform for Malaysia to showcase its labour reforms in building a more inclusive and resilient society, scheduled for Sept 29 to Oct 3, themed “Shaping Social Security for a World in Transition.”