The Malaysian government recently decided to set the employer contribution rate for foreign labor provident fund at 2% of the base salary, which has received support from multiple business groups. The business community believes that a 2% contribution rate is more reasonable compared to the government's initial proposal of 12% and can alleviate the burden on businesses.

Prime Minister Anwar Ibrahim announced this decision during the Chinese New Year's Eve lunch hosted by the Malaysian Chinese General Chamber of Commerce on February 3rd. He stated that the employer contribution rate for foreign labor provident fund will be set at 2%, far lower than the initially proposed 12%. The personal provident fund contribution rate for foreign workers will also be maintained at 2%. Anwar also promised not to increase the employer's contribution rate in the short term, and revealed that the cabinet will discuss and approve this matter at the meeting on February 5th.

In a statement released on February 4th, the China General Administration stated that the government's reduced payment rate is quite reasonable, taking into account the pressure of rising operating costs faced by enterprises and the even worse business environment after the United States imposed tariffs. Mr. Zhong believes that this adjustment will help alleviate the burden on enterprises, especially in the current context of increasing global economic uncertainty.

The Chairman of the Malaysian Employers' Federation, Saihu Shin, also issued a statement on February 3 supporting the government's decision. He pointed out that although paying the housing provident fund for foreign workers would increase the operating costs of the enterprise, a 2% contribution rate is more reasonable than the initially proposed 12%. Saihu Shen estimates that some companies may need to cut their expenses by 10% to cope with this additional cost, which may lead to some companies reducing the employment of foreign labor to lower labor costs. He called on the government to fully consult with stakeholders and conduct in-depth research when adjusting the provident fund contribution rate in the future to ensure the rationality and feasibility of the policy.

The President of the Malaysian Small and Medium Enterprises Association, Chen Qixiong, hopes that the government can further reduce the employer contribution rate to 1%. In his statement on February 3rd, he pointed out that although a 2% payment rate is not a large amount for individual employers, the government has recently introduced measures such as targeted subsidies for diesel, multi-level head taxes, and plans to implement targeted subsidies for RON95 gasoline and a minimum wage system. These policies combined have put enormous pressure on small and medium-sized enterprises. Chen Qixiong emphasized that industries such as agriculture, manufacturing, and construction heavily rely on foreign labor, and the salary of foreign labor is not necessarily the lowest at 1700 ringgit (approximately 519 Singapore dollars). For example, restaurant employees often earn salaries exceeding 2500 ringgit. Therefore, when setting the contribution rate for foreign labor provident fund, the government should fully consider these practical situations.