Foreign Workers' EPF Contribution Proposal Aims To Address Wage Equity - Amir Hamzah

KUALA LUMPUR, Nov 6 (Bernama) -- The introduction of Employees Provident Fund (EPF) contribution by foreign workers aims to facilitate wage equity in the country, ensuring that local labour is not disadvantaged along the way, said Finance Minister II Datuk Seri Amir Hamzah Azizan.

He said Malaysia has seen significant improvement in the welfare of foreign labour while ensuring the nation abides by good practices prescribed by international labour organisations.

The minister said the EPF contribution for foreign workers proposal, as announced under the Budget 2025, was suggested and envisioned to address the issue of wage differentiation between local and foreign labour as the country drives up minimum wage policy.

“When foreign labour is required to contribute to the EPF, we are inadvertently trying to equate foreign labour with local labour, (hence) people are not overly incentivised to start (employing) foreign labour along the way.

“This is not to say that they are not valuable. I think foreign labour is valuable for promoting growth, but it cannot be at the expense of Malaysian employees,” he said during a fireside chat session at the ESG and Sustainability Conference 2024 organised by CGS International Securities Malaysia Sdn Bhd today.

According to Amir Hamzah, the EPF is currently examining the mechanism for phasing the deduction into the system.

“Give them time, as by next year, they will come out with an articulation on how we are going to do or install it. We do not want disruption,” he added.

In the meantime, Amir Hamzah stressed that the government is not considering reintroducing the goods and services tax (GST) at the moment to avoid being seen as penalising lower-income groups compared to the existing tax system.

“While the GST system is a much stronger tax system, maybe the net effect to the bottom (income earners) is a lot worse than a much more progressive mechanism along the way.

“So today, we have the sales and services tax (SST) regime in place, and what we are doing is widening the catchment of the SST while the ability to institutionalise it is much faster than rolling in the GST again,” he added.

-- BERNAMA