By DayakDaily Team
KUCHING, June 28: The federal government has been urged to reconsider the Employees Provident Fund (EPF) for foreign workers, as it could impact Malaysia’s construction industry.
In a statement, Sarawak Housing and Real Estate Developers’ Association (SHEDA) advisor Dato Sim Kiang Chiok said the Malaysian construction industry has long depended on foreign workers due to a persistent shortage of local labour willing to take on manual and semi-skilled construction jobs.
“Introducing an additional mandatory EPF contribution of two per cent each by employers and foreign employees will undoubtedly raise the cost of construction projects.
“In a sector where profit margins are already squeezed by rising material prices, labour shortages, currency depreciation, and Sales and Service Tax from July 2025, these new requirements could exacerbate financial pressures on developers and contractors. This is particularly true for small- and medium-sized construction firms with limited capital buffers,” he said.
He added that if developers are unable to absorb these additional costs, they may have no choice but to pass them on to property buyers through higher prices. However, any significant price increase could affect affordability, especially for first-time homebuyers in the B40 and M40 income groups, potentially leading to a slowdown in property transactions and hindering efforts to improve homeownership rates.
On the other hand, he said, if developers opt to absorb the costs, it could reduce profitability, delay projects, or cause some planned developments to be shelved altogether.
“Moreover, Malaysia’s weaker currency compared to regional competitors, like for example, Singapore, already makes it less attractive for foreign workers.
“The new EPF rule could deter foreign workers further, as they might perceive mandatory contributions as deductions reducing their take-home pay, in contrast to Singapore’s higher wages and more favourable foreign worker policies that could siphon away much-needed labour, intensifying Malaysia’s workforce shortage in the sector,” he said.
Therefore, he urged the government to reconsider or introduce mitigating measures, such as tax incentives or subsidies for developers and contractors, to balance the need to secure foreign workers’ retirement savings with the urgent necessity of keeping the construction industry competitive, efficient, and affordable.
“Without thoughtful intervention, the new policy could risk derailing critical infrastructure and housing projects that are vital for Malaysia’s economic growth,” he said.
On June 25, the EPF announced that beginning with October 2025 wages, employers and their non-Malaysian employees will each be required to contribute two per cent of the worker’s monthly salary to the EPF.
EPF said the expansion of mandatory contribution coverage will include all non-Malaysian workers in Malaysia—excluding domestic helpers—who possess valid passports and work permits issued by the Immigration Department of Malaysia. — DayakDaily
