IOI Corp Bhd managing director and chief executive officer Datuk Lee Yeow Chor (right) speaks at the press conference after the group’s AGM on Tuesday, while IOI Corp chairman Tan Sri Peter Chin Fah Kui looks on. (Photo by Patrick Goh/The Edge)

KUALA LUMPUR (Nov 5): IOI Corp Bhd (KL:IOICORP) estimates that the revision of the new minimum wage to RM1,700 from RM1,500, together with the introduction of mandatory foreign worker contribution to the Employees Provident Fund (EPF) that was announced recently under Budget 2025, will impact less than 1.5% of the group’s annual net profit.

While Malaysian planters have voiced concern about the financial strain from the additional cost that will be incurred from the new measures, the group’s managing director and chief executive officer Datuk Lee Yeow Chor thinks the overall impact would be “manageable”.

“We also have a (new) threshold for the windfall profit levy, which has been increased slightly, so we expect the overall impact to remain manageable. Additionally, crude palm oil (CPO) prices have risen significantly in recent months,” Lee told reporters after the group’s annual general meeting on Tuesday.

He was referring to how the levy threshold on the production of fresh fruit bunches, which is at RM3,000 for Peninsular Malaysia and RM3,500 for Sabah and Sarawak, would be raised to RM3,150 and RM3,650, respectively.

Gradual increase in EPF contribution for foreign workers

Nevertheless, the group, which currently employs about 16,000 to 18,000 foreign workers, has proposed that the government implement the foreign workers’ contribution to EPF in a gradual manner, starting from a 2% contribution rate.

It also called on the government to engage with foreign workers to better implement the policy, and to ensure that they view the policy as beneficial, especially given the potential challenges in withdrawing their savings upon returning home, since EPF typically allows withdrawals only at age 55, said Lee.

Foreign workers typically stay in Malaysia for only two to four years, resulting in a relatively short contribution period, said Lee.

“We must understand that the situation is different with respect to foreign workers. There is an age limit, and some of them may serve for only two to four years, which is a very short duration. So, for foreign workers who are already in the country, contributions can start at 2% and gradually increase to 11%.

“We also need to engage with foreign workers to determine whether they see this as a fair, win-win solution. We have to consider how they will withdraw their contributions after they return home,” Lee said.

The specific details of the EPF contribution requirements have yet to be released following Prime Minister Datuk Seri Anwar Ibrahim’s announcement under Budget 2025 last month, when he said the proposal “will be implemented in phases”.

Meanwhile, IOI Corp has also reached out to and obtained feedback from the Ministry of Plantation and Commodities about providing support for smallholders, including providing high-quality seeds and fertilisers to help them meet sustainability standards.

“This support could include procuring fertilisers on behalf of the smallholders, and providing seedlings if they plan to replant,” he explained.

“The government hopes that major industry players like us can offer smallholders guidance on best agricultural practices, economic viability, and sustainability. These initiatives are still in the early stages now,” he added.

Anwar had urged major palm oil companies such as IOI Corp, Kuala Lumpur Kepong Bhd (KL:KLK), SD Guthrie Bhd (KL:SDG) and United Plantations Bhd (KL:UTDPLT) to adopt palm oil smallholders who own land adjacent to their plantations, and provide necessary assistance.

IOI Corp was trading one sen lower at RM3.96 at the time of writing on Tuesday, giving the group a market capitalisation of RM24.89 billion.