Human Resources Development Fund in Malaysia

The Human Resource Development Fund (HRDF) is a training fund that has been established for skills development in Malaysia. It is operated through a levy grant system in which companies pay a training levy into the Fund. The levy payers (employers) train their citizen employees and are reimbursed for costs they incurred for training.

The governing policies are; the Levy Order which prescribes the training levy rates and the Reimbursement Regulations sets out the reimbursement criteria. The training levy is based on a levy payer’s turnover which is collected by the Govt.

What is HRDF?

The Human Resources Development Fund (HRDF) was governed by the Pembangunan Sumber Malaysia Berhad Act 2001. It was established to develop quality human capital and world class workforce in Malaysia to achieve a high-income economy based on knowledge and innovation.

The Human Resources Development Fund (HRDF) is a pool of funds collected from manufacturing and services sectors employers (listed in the first schedule of Pembangunan Sumber Malaysia Berhad Act 2001). These employers are liable to pay a Human Resource Development levy for each working employee at the rate of 1.0% (0.5% for voluntary registered employer) of the monthly wages of the employee. Monthly wages included fixed salary and fixed allowance, non-fixed remuneration such as bonus, commission or incentives are not liable to HRDF.

The Benefits of HRDF

Employers registered or incorporated in Malaysia who have registered with PSMB and pay the HRD levy immediately upon registration are eligible to apply for training grants (financial assistance) to defray all or a major portion of the “allowable costs” of training their employees. Training must be in the area of direct benefit to their business operations.

Financial assistance is, therefore, not given to individuals who enroll and finance their own training programmers, whether partially or fully, and subsequently requested their employers for sponsorship. Neither is financial assistance given to employers who bear the cost of training after the successful completion of training by their employees.

Employers who contribute to HRDF in Malaysia they are eligible to access their levy payments by claiming training reimbursements through various training schemes that are implemented by PSMB.

Employer Obligated to Register with HRDF

Section 13(1) of the PSMB Act 2001 stipulates that every employer who is covered under the Act is required to register with PSMB within such time and manner as may be prescribed.

Any employer who is convicted for not registering with PSMB may be fined up to an amount not exceeding RM10,000 or face imprisonment up to a year, or both (Section 13 (2)).

HRDF including sectors

According to the First Schedule of PSMB Act, 2001, definitions of industries covered are as follows:

Services Sector

Security Services
Air transport
Building and Landscape Services
Engineering Support and Maintenance Services
Freight Forwarding
Telecommunication
Hotel
Training
Shipping
Energy
Postal or Courier
Direct Selling
Advertising
Computer Services
Commercial Land
Travel Agency (inbound)
Transport & Railway Transport Services
Port Services
Higher Education
Research and Development
Information Service
Private Hospital Services
Health Support Services
Warehousing Services
Gas, Steam and Air-Conditioning Supply
Sewerage
Waste
Water Treatment and Supply
Early Childhood Education
Management and Material Recovery Services
Production of
Event Management Services
Motion Picture, Video and Television Programme, Sound Recording and Music Publishing
Franchise
Tourism Enterprise (outbound)
Private Broadcasting Services
Veterinary Services
Food and Beverage Services
Driving School
Sale and Repair of Motor Vehicles
Hypermarket, Supermarket and Departmental Store Services