Raising employers’ EPF contribution should be gradual

Recently, the Labour leaders have called for the employer contribution to be increased to 20%. Employers are currently required to contribute 13% for those earning RM5,000 and below, and 12% for those earning above RM5,000. Employees contribute 11%. According to the Federation of Malaysia Manufactures, bosses are not in favor of the proposal.

Howern takes a positive stand on this matter and our Managing Director, Wan Choon How addressed several questions in the interview with FMT.

1. How has recovery for your business has been since the pandemic?

Howern has been experiencing a robust recovery since lifting the Movement Control Order (MCO) in 2022. We reckoned the global issues surrounding the war in Ukraine, the financial crisis in the US banking system, and China-US tension are the main contributing factors to our positive growth, less related to the pandemic.

2. How has the new minimum wage affected your business?

When it comes to the new minimum wage, it has minimal impact on our business. We employ 100% Malaysian which is in line with our company vision of uplifting Malaysia’s name in the world arena and transferring high value skill sets in among Malaysian, in conjunction with our government’s direction towards high income nation. As we have always prioritized our employees, paid salaries are well above the minimum wage of RM1,500.

We believe that continual increases in the minimum wage could potentially affect the bottom line of all companies. Therefore, wage increases should be justified by enhanced productivity.

At Howern, we are committed to efficiency and effectiveness to ensure sustainable growth. We deployed in-house software to all our water systems, it enables our technical team with the critical information they need on-site, expediting the services and maintenance work. Our clients are also pleased with the quick turnaround time.

3. What are your thoughts on potential increases in employers’ minimum wage / EPF contribution?

Regarding potential increases in employers’ EPF contributions, we welcome such an initiative. Like many other businesses, the increment should be gradual with a holistic approach put in place.

We believe that productivity improvement, exploring larger markets (both domestically and internationally), taxation incentives, and transparent government strategies are critical in empowering local SMEs. Rather than just focusing on EFP increases, we advocate for comprehensive assistance to help local businesses thrive.