Malaysia has set the mandatory Employees Provident Fund (EPF) contribution rate for foreign workers at two per cent to ensure fair treatment of workers of all nationalities, in accordance with international standards.
The move follows the tabling of the 2025 Budget in October 2024 by prime minister Anwar Ibrahim, and details will be announced by the Human Resources Ministry following Cabinet discussions.
The Malaysia Budget and Business Hotel Association (MyBHA) has welcomed the government’s decision.
MyBHA president Sri Ganesh Michiel described the move as a progressive step toward supporting the resilience of local businesses, particularly in the hospitality sector, amid rising operating costs.
“However, we urge the government to ensure that this policy is followed by strict enforcement against short-term rental accommodation providers that often employ foreign workers without complying with labour laws and regulations,” he said.
Michiel highlighted that many short-term rental accommodation (STRA) operators fail to meet legal requirements such as tax payments and safety compliance, while also employing undocumented foreign workers without adhering to the EPF contribution law.
“This situation has not only created unfair disadvantages for licensed hospitality providers but has also negatively impacted the sector’s competitiveness and the country’s revenue. Additionally, STRA operators can attract customers with lower prices due to the lack of operational costs they bear compared to licensed hotels,” he added.
