# HRD Corp: How Malaysia Funds Workforce Training

> HRD Corp (Pembangunan Sumber Manusia Berhad) is Malaysia's statutory training-levy body: employers with 10+ local staff pay 1% of monthly wages, then reclaim it as grants to upskill workers.

- Category: employment
- Language: en
- Status: published
- Updated: 2026-08-14
- Canonical: https://negaraku.md/en/employment/hrd-corp

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If your company runs Malaysian payroll, one line on the payslip ledger may read as a **1% levy to HRD Corp** — and unlike EPF or SOCSO, it is not a benefit paid out to the worker. It is a training budget the *employer* pays in and then claims back. Understanding that loop is the difference between treating the levy as a tax and using it as intended.

**HRD Corp** is the operating name of **Pembangunan Sumber Manusia Berhad (PSMB)**, a statutory body incorporated through the enactment of the **Pembangunan Sumber Manusia Berhad Act 2001** on 17 April 2001. It operates as an agency under the **Ministry of Human Resources (KESUMA)**.

## What is HRD Corp, and what does it do?

HRD Corp administers a national **levy-and-grant** system. Covered employers pay a monthly levy into the fund; registered employers then draw that money back down as grants to train, reskill and upskill their workforce. Employers who pay the levy are eligible to claim reimbursement for approved training programmes — limited to the approved amount or the actual expenses incurred, **whichever is lower**.

The organisation was first established in 1993 as the **Human Resources Development Council (HRDC)**. In **April 2021**, the Human Resources Development Fund (**HRDF**) transitioned to become the Human Resource Development Corporation (**HRD Corp**), reflecting new responsibilities including expanding workforce development across all Malaysian employers and individuals. HRDF and HRD Corp are the same body.

## Who must register, and how much is the levy?

Registration turns on your headcount of Malaysian employees.

| Malaysian employees | Registration | Levy rate |
|---|---|---|
| 10 or more | Compulsory | 1% of monthly wages |
| 5 to 9 | Voluntary | 0.5% of monthly wages |

Employers with a minimum of ten Malaysian employees are compulsorily required to register with HRD Corp. Those with 5 to 9 may register voluntarily at the reduced 0.5% rate.

## How is the levy calculated and paid?

The levy is worked out on wages plus fixed allowances:

> **Levy = (total wages or basic salaries + fixed allowances) × 1%** — or × 0.5% for voluntary registrants.

Payment is due **by the 15th of each month** to avoid penalties. The consequences of non-compliance are set out in the PSMB framework:

- **Failure to register:** a fine not exceeding **RM10,000** or imprisonment not exceeding **one year**, or both.
- **Failure to pay the levy:** a fine not exceeding **RM20,000** or imprisonment not exceeding **two years**, or both — plus yearly interest of **10%** in respect of each day of default.

## Why did coverage suddenly expand in 2021?

For most of its history the levy reached only specified sectors. That changed with the **PSMB (Amendment of First Schedule) Order 2021** (gazetted 26 February 2021), which expanded the coverage of the PSMB Act 2001 effective **1 March 2021** to include **almost all industries**. Exceptions include the Federal Government, State Government, local councils and statutory bodies. This is why employers who had never dealt with HRDF suddenly became liable.

## Where does levy you don't spend go?

Unused levy is not entirely the employer's to sit on indefinitely. HRD Corp implemented **Program Latihan MADANI**, utilising **15% of employers' remaining unused levy balance** for the year, under **Employer Circular No. 5/2024** (following No. 2/2024 for 2023). In practice, levy left unclaimed at year-end can be partly redirected to fund national training programmes rather than lapsing back to the employer.

## What's next

Check your Malaysian-employee headcount against the 10-employee threshold, then register through the official HRD Corp portal and set up monthly levy payment before the 15th. For the authoritative wording of the registration, levy and penalty provisions, the full text of **Akta 612** is published by the Ministry of Human Resources on its eAkta portal — the exact section numbers behind the figures above should be read there directly.

## Sources

- About Us | HRD Corp — https://hrdcorp.gov.my/about-us/ (HRD Corp (Pembangunan Sumber Manusia Berhad))
- Employers FAQ | HRD Corp — https://hrdcorp.gov.my/faq/ (HRD Corp (Pembangunan Sumber Manusia Berhad))
- Expansion of the Coverage of Pembangunan Sumber Manusia Berhad (PSMB) Act 2001 — https://www.at-mia.my/2023/02/13/expansion-of-the-coverage-of-pembangunan-sumber-manusia-berhad-psmb-act-2001/ (Malaysian Institute of Accountants (MIA))
- Circulars | HRD Corp — https://hrdcorp.gov.my/circulars/ (HRD Corp (Pembangunan Sumber Manusia Berhad))
- Akta Pembangunan Sumber Manusia Berhad 2001 (Akta 612) — https://eakta.mohr.gov.my/assets/pdf/akta_kemahiran/Akta%20pembangunan%20sumber%20manusia%20berhad%202001%20Akta612.pdf (Ministry of Human Resources Malaysia (eAkta))

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