Human Resources Development Fund (HRDF)

What Is Human Resources Development Fund (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.

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)).
According to the First Schedule of PSMB Act, 2001, definitions of industries covered are as follows:
Services Sector
Sub-Sector / Industry Eligibility Criteria Rate Of Levy Payment
  • Hotel
  • Air transport
  • Travel Agency (inbound)
  • Telecommunication
  • Freight Forwarding
  • Shipping
  • Postal or Courier
  • Advertising
  • Computer Services
  • Energy
  • Training
  • Higher Education
  • Commercial Land
  • Transport & Railway Transport Services
  • Direct Selling
  • Port Services
  • Engineering Support and Maintenance Services
  • Research and Development
  • Warehousing Services
  • Security Services
  • Private Hospital Services
  • Gas, Steam and Air-Conditioning Supply
  • Water Treatment and Supply
  • Sewerage
  • Waste
  • Management and Material Recovery Services
  • Production of
  • Motion Picture, Video and Television Programme, Sound Recording and Music Publishing
  • Information Service
  • Building and Landscape Services
  • Event Management Services
  • Early Childhood Education
  • Health Support Services
  • Franchise
  • Sale and Repair of Motor Vehicles
  • Private Broadcasting Services
  • Driving School
  • Veterinary Services
  • Hypermarket, Supermarket and Departmental Store Services
  • Food and Beverage Services
  • Tourism Enterprise (outbound)
≥ 10 Malaysian Employees (mandatory to register)

5 – 9 Malaysian Employees (given option to register)

1%

0.5%

Manufacturing Sector
Sub-Sector / Industry Eligibility Criteria Rate Of Levy Payment
  • Electrical and Electronic
  • Metal Product
  • Mineral Product
  • Food and Beverages
  • Transport Equipment
  • Plastic
  • Wood & Wood based and Cork
  • Machinery
  • Industrial Chemicals
  • Paper and Pulp
  • Iron and Steel
  • Rubber Product
  • Furniture and Fixtures
  • Printing and Publishing
  • Textile and Apparel
  • Petroleum and Coal
  • Optical and Photography
  • Glass and Glass Product
  • Petroleum Refinery
  • Footwear
  • Ceramic
  • Tobacco
  • Leather
≥ 10 Malaysian Employees (mandatory to register)

5 – 9 Malaysian Employees (given option to register)

1%

0.5%

Mining & Quarrying Sector
Sub-Sector / Industry Eligibility Criteria Rate Of Levy Payment
  • Petroleum and Gas Extraction
  • Mineral and Stone Quarrying
≥ 10 Malaysian Employees (mandatory to register)

5 – 9 Malaysian Employees (given option to register)

1%

0.5%

Benefit of HRDF

Employers registered and / 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 programmes, 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 are eligible to access their levy payments by claiming training reimbursements through various training schemes that are implemented by PSMB.