KUALA LUMPUR - The recent introduction of a two per cent Employees Provident Fund (EPF) contribution rate for both employers and non-citizen workers is a fair and balanced measure that supports social justice while preserving Malaysia’s international standing.

Human Resources Minister Steven Sim said the policy, which took effect last month, aligns with international labour standards, including those established by the International Labour Organization (ILO), and is crucial to maintaining Malaysia’s credibility in the global marketplace.

According to Sim, the two per cent contribution framework offers three main advantages: it helps curb the annual outflow of foreign currency estimated at around RM1 billion, reduces the risk of workers absconding from employers, and provides a safety net for foreign workers during their stay in Malaysia.

“This contribution is not a retirement scheme like that for local workers.

“It is a savings fund that can be withdrawn when they return to their home countries, and it can also be used for emergencies, including in cases of death,” he said.

Sim added that while the two per cent rate may appear modest compared to the contributions made by Malaysian employees, it nonetheless ensures basic social protection for foreign workers.

“The two per cent rate is fixed. While it may seem small compared to the over 10 per cent contributed by Malaysian workers, it at least provides basic social protection for foreign employees,” he said during the ‘Morning Talk with the Human Resources Minister’ session at the Tax Seminar on Budget 2026 on 3 November.

He clarified that although the EPF policy is managed by the Ministry of Finance and not directly under his ministry, he felt compelled to address public misunderstandings regarding its purpose.

The minister emphasised that the initiative balances economic and social objectives, while reflecting Malaysia’s commitment to safeguarding workers’ rights and promoting ethical labour governance.

“Fundamentally, this is the right thing to do. 

“Legally, it aligns with international labour regulations, and practically, it delivers immediate benefits to the country,” he said.

The one-day seminar, organised by Grant Thornton, was attended by more than 260 participants.