KUALA LUMPUR (Oct 22): The government’s proposal to make it compulsory for all foreign workers to contribute to the Employees Provident Fund (EPF) could impose additional cost pressures on Malaysia’s planters, according to Malaysian Palm Oil Board (MPOB) director general Datuk Dr Ahmad Parveez Ghulam Kadir.

The country's plantation industry players are particularly concerned about the cumulative financial impact of this new policy, Ahmad Parveez told The Edge on the sidelines of the Oils and Fats International Congress 2024 organised by the Malaysian Oil Scientists' and Technologists' Association.

The exact details of the contribution are yet to be disclosed after Prime Minister Datuk Seri Anwar Ibrahim, who is also the finance minister, announced the measure when tabling Budget 2025 in Parliament last Friday.

“The concern within the industry is that this will lead to higher wages for foreign workers, which would, in turn, increase the financial burden on companies," Ahmad Parveez said. The new EPF requirement will also significantly affect costs, especially for the plantation sector, which relies heavily on foreign labour, he noted.

Not only private companies but also government agencies like MPOB, which contracts foreign labour for various services, would be affected by the additional costs, he said.

Other organisations like the Master Builders Association Malaysia (MBAM) had on Monday voiced their opposition to the government's plan to implement the mandatory EPF coverage for foreign workers. The Federation of Malaysian Manufacturers urged the government to delay the plan by two years to allow sufficient time for stakeholder consultations.

Minister of Plantation and Commodities Datuk Seri Johari Abdul Ghani said the ministry is awaiting industry feedback on the issue. “We will wait for the debate in Parliament and see what feedback we receive,” he told reporters here.

As of end August 2024, the number of registered low-skilled foreign workers in Malaysia surged 41.4% year-on-year to 2.5 million from 1.8 million in the same period last year, according to data from the latest economic report released by the Ministry of Finance.  

While foreign workers are largely employed in the manufacturing (31.5%), construction (28.4%), and services (18.2%) sectors, the plantation industry remains highly dependent on foreign labour.  

The country's largest share of foreign workers came from Bangladesh (37.8%), followed by Indonesia (23.7%) and Nepal (16.7%).

Low-skilled foreign workers currently represent 14.8% of Malaysia’s total employment, nearing the country’s allowable threshold of 15%.

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