Starting from Nov 15, the government will discontinue a pool fund under its human capital development programme which is made up of 30% of contributions from employers registered with the Human Resources Development Fund (HRDF), according to The Star.

Human Resources Minister M. Kula Segaran made the announcement on Saturday said the decision was made after a consideration with the Governance Oversight Committee (GOC), the HRDF Board of Directors and its management. 

The minister said that the final payment towards the Consolidated Fund was for the month of October 2018. Picture Credit: New Straits Times

The 30% deduction was first initiated in the 2016 Budget by then prime minister Najib Razak.

The HRDF is an agency under the Human Resources Ministry that manages a fund for human resource training and development that were contributed by employers.

Under the Pembangunan Sumber Manusia Berhad (PSMB) Act 2001, registered employers with HRD are required to contribute 1% levy on their employee’s monthly salary to the fund. 30% of the levy channelled to the Consolidated Fund since 2016 to help train employees from small companies that could not afford to contribute to HRDF and employees from the B40 category.

M. Kula Segaran said although employers were under the impression that their contributions to the Consolidated Fund could not be used to train non-contributors, they have to view it as a national service in helping to train good local workforce.

Reviewing HRDF

The Human Resources Minister’s announcements follow recommendations by an independent committee set up last June 28 to review all aspects of the HRDF Board governance. The committee said it found poor board governance and weak compliance, ineffective organisation structure, unclear governance over HRDF funds, and ambiguous clauses under the PSMB Act.

It also found that HRDF’s training committee to identify the skills required by different industries was not staffed by competent individuals.

The Consolidated Fund came into focus when it was first exposed in June 2018 that a large amount of money in the fund had been misappropriated by its former management for things other than its intended purposes.

Kula Segaran said other actions following the committee’s revelations included the appointment of a new Chief Executive on July 12, the resignation of seven board members and a restructuring of HRDF’s organisation structure.

The minister said there were also cases of salaries and bonuses paid to selective management staff members without the approval of the board. He added that there would be civil and criminal proceedings against the ex-board members.

In his speech, M. Kula Segaran promised transparency and assured the employers that the new work culture in HRDF would be focused at addressing their needs, queries, and complaints.

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