Finance minister II Amir Hamzah Azizan said the policy is expected to be implemented in the fourth quarter of this year, reported Bernama.

Employers will have to contribute 2% of a foreign worker’s salary while the employee’s contribution has also been set at 2%. This is lower than the 11% employee contribution and 12%-13% employer contribution required for Malaysian workers.

Amir said making EPF contribution compulsory for foreign workers is in line with international best practices.

He said it could also indirectly reduce reliance on foreign workers in the long run, enhancing the competitiveness of local businesses and encouraging a shift towards automation.

“If there is no EPF contribution for foreign workers, hiring them would be cheaper than employing local workers … that is why this effort is important to prevent the imbalance and encourage local employment.

“In addition, this measure can help the government reduce the number of undocumented foreign workers, as only those legally registered with employers are eligible to contribute to the EPF,” he said.

Amir said foreign workers can withdraw the amount upon returning to their country of origin after their work permit expired, with proof of employment termination.

Currently, foreign workers can voluntarily opt to contribute to the EPF at a rate of either 11% for those aged below 60, or 5.5% for the rest. Employers contribute only RM5 under both schemes.

“As of December 2024, only 22,635 foreign workers, or 0.9% of the 2.5 million, opted to actively contribute to the EPF.

“The difference in the employer’s share of contributions also results in a lower wage cost for foreign workers compared to local workers,” he said.