The Sabah Progressive Party (SAPP) warns of the potential economic impact of the proposed mandatory 2% Employees Provident Fund (EPF) contribution rate for foreign workers.
The mandatory 2% Employees Provident Fund ( EPF ) contribution rate for foreign workers would place a significant burden on Sabah , according to the Sabah Progressive Party (SAPP). SAPP information chief, Chin Vui Kai, voiced his opposition to the proposal, warning that it would have far-reaching consequences for Sabah 's economy. \ Chin expressed concern that forcing foreign workers to contribute to the EPF would disrupt domestic economic activity.
He argued that instead of circulating within the consumer market, funds would be redirected towards the capital market, potentially dampening market vitality. Additionally, he pointed out that most foreign workers have short employment cycles, rendering mandatory EPF contributions less beneficial for them. Instead, it would increase the financial burden on businesses, many of which in Sabah have already faced closures due to economic difficulties, Chin stated.\Chin further explained that Sabah's market remains reliant on suppliers from Peninsular Malaysia, encompassing both product supply and transportation costs. He asserted that policies such as increasing minimum wages in the Peninsula would directly lead to higher goods prices in Sabah, exacerbating the cost-of-living crisis. As an example, he cited past increases in diesel prices resulting from subsidy removal in the Peninsula, which have already raised business costs and triggered inflation. With Tenaga Nasional Berhad’s (TNB) electricity tariff set to rise, Chin warned that the situation would worsen, pushing Sabah's market into a cycle of worsening inflation. He urged the Federal Government to reconsider these policies and engage in comprehensive discussions with industry players to prevent a surge in inflation in Sabah. Prime Minister Datuk Seri Anwar Ibrahim had proposed during the Budget 2025 presentations to mandate all non-citizen workers to contribute to the EPF to ensure fair treatment for all workers regardless of nationality. Following this, the Finance Ministry proposed standardizing the EPF contribution rate for Malaysians and foreign nationals with new employment contracts, meaning employees would contribute 11% while employers contribute 12 % to - 13%. The Finance Ministry also proposed a phased implementation of the contribution rate for foreign workers and employers with existing contracts, starting at two percent and gradually increasing over six years until it matches the EPF contribution rate applied to all workers in Malaysia
FOREIGN WORKERS EPF SABAH ECONOMY INFLATION
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