Lim Guan Eng says SMEs oppose mandatory EPF contributions for foreign workers

The DAP lawmaker said he had told Prime Minister Datuk Seri Anwar Ibrahim that employers, including MSMEs, were opposed to the mandatory contributions and the increase in minimum wages for existing foreign workers. — Bernama pic

By Malay Mail

First Published: Friday, 30 Oct 2026 9:39 AM MYT

KUALA LUMPUR, Oct 30 — Bagan MP Lim Guan Eng has urged the government to exempt existing foreign workers from mandatory Employees Provident Fund (EPF) contributions and a proposed RM300 monthly minimum wage increase, saying the measures would impose additional costs on local businesses, particularly micro, small and medium enterprises (MSMEs).

The DAP lawmaker said he had told Prime Minister Datuk Seri Anwar Ibrahim that employers, including MSMEs, were opposed to the mandatory contributions and the increase in minimum wages for existing foreign workers.

He claimed Anwar had been given misleading information suggesting that employers had begun accepting the requirement for a 2 per cent EPF contribution for foreign workers.

In a written parliamentary reply on October 22, Anwar said 78,129 employers had contributed to the EPF for 1,754,460 non-Malaysian workers since the mandatory scheme was introduced in October 2025.

Of these employers, 67,194, or 86 per cent, were SMEs, which Anwar said indicated that the policy was beginning to gain acceptance and was being implemented by employers.

However, Lim said those responsible for SME affairs had failed to inform the prime minister of the actual opposition among businesses to the policy.

He said the mandatory EPF contributions should apply only to newly recruited foreign workers, as the requirement was not included in existing employment contracts.

Lim argued that imposing the contributions on existing foreign workers would increase employers’ labour costs unexpectedly and affect their financial position.

He cited the Malaysian Employers Federation’s estimate in 2025 that annual spending on foreign workers’ wages exceeded RM70 billion, saying the financial implications for the national economy could be substantial.

Lim also objected to raising the monthly minimum wage for existing foreign workers by RM300, from RM1,700 to RM2,000, saying this would have an even greater financial impact on employers and contradict existing salary agreements.

He questioned the government’s reliance on International Labour Organisation (ILO) principles against discrimination between foreign and local workers to justify extending the same benefits to foreign employees.

Lim asked why foreign domestic workers were exempt from the mandatory 2 per cent EPF contribution despite also being foreign workers.

He also cited Singapore’s decision to exclude foreign workers from contributions to its Central Provident Fund, which is similar to Malaysia’s EPF, from January 1, 2003, questioning why the ILO had taken no action over the arrangement.

On minimum wages, Lim questioned why Malaysian workers employed by companies with annual sales of less than RM50 million were not required to comply with the additional RM300 increase, while domestic workers were also exempt.

He asked whether these exemptions did not amount to discrimination.

Lim said he had conveyed the concerns and dissatisfaction of MSMEs to Anwar during a meeting at the Parliament administrative block on Tuesday, October 27.

He urged the government to prioritise local employers by exempting existing foreign workers from mandatory EPF contributions and the additional RM300 minimum wage increase.