KUALA LUMPUR (Feb 3): The Federation of Malaysian Manufacturers (FMM) has urged the government to maintain the proposed mandatory 2% Employees Provident Fund (EPF) contribution rate for foreign workers for a "reasonable period", allowing businesses to plan and manage costs effectively.

Any future policy changes, including potential adjustments to the contribution rate, should involve consultations with the private sector, particularly industries that rely on foreign labour, said FMM president Tan Sri Soh Thian Lai.

"Clear guidelines should also be provided on the mechanics of the contribution scheme, its integration with existing social security schemes, and the potential for further refinements, ensuring transparency and a smooth transition for all stakeholders," Soh said in a statement on Monday.

It was issued after Prime Minister Datuk Seri Anwar Ibrahim announced that the government has proposed implementing a mandatory 2% EPF contribution rate for foreign workers. Anwar, who is also the finance minister, said the rate is lower than the 12% that was originally proposed.

FMM, in its statement, noted that the government had, during the tabling of Budget 2025 in October 2024, proposed yearly increments in the contribution rate for foreign workers over six years.

"The decision to reduce the contribution rate to 2%, without compounding, is a welcome relief and reflects the government’s responsiveness to industry concerns by striking a balance between worker welfare and business sustainability," said Soh.

He reaffirmed FMM's commitment to working closely with the government to ensure that policies affecting the manufacturing sector are well-balanced, promoting both business growth and fair labour practices.

"We look forward to continued engagement with the relevant ministries to address any remaining concerns and ensure a smooth implementation of the new EPF contribution structure," he added.

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