HRD Corp is the operating name of Pembangunan Sumber Manusia Berhad (PSMB), a statutory body under the Ministry of Human Resources incorporated through the PSMB Act 2001 (Akta 612). It runs a levy-and-grant system: covered employers pay a monthly training levy into a national fund, then reclaim it as grants that reimburse approved employee training. Registration is compulsory once an employer reaches 10 or more Malaysian employees.
- HRD Corp is the operating name of Pembangunan Sumber Manusia Berhad (PSMB), incorporated through the PSMB Act 2001 on 17 April 2001, operating as an agency under the Ministry of Human Resources.
- Employers with 10 or more Malaysian employees must register (mandatory, 1% levy); those with 5–9 may register voluntarily at 0.5%.
- The levy is (total wages or basic salaries + fixed allowances) × the applicable rate, and must be paid by the 15th of each month.
- Coverage expanded to almost all industries from 1 March 2021 via the PSMB (Amendment of First Schedule) Order 2021, with exceptions such as federal/state government and statutory bodies.
- Failing to register can draw a fine up to RM10,000 or up to one year's imprisonment; failing to pay the levy, up to RM20,000 or two years, plus 10% yearly interest per day of default.
- Unused levy has been partly redirected — 15% of the remaining year-end balance funded Program Latihan MADANI under Employer Circular No. 5/2024.
Who this applies to: Malaysian employers checking whether they must register and pay the HRD levy, and HR staff planning to reclaim it as training grants.
On this page
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.
What is the difference between HRDF and HRD Corp?
They are the same organisation. Pembangunan Sumber Manusia Berhad — long known by its fund name HRDF — transitioned to HRD Corp (Human Resource Development Corporation) in April 2021, reflecting an expanded mandate across all Malaysian employers and individuals.
Does my company have to register with HRD Corp?
Registration is compulsory if you employ 10 or more Malaysian employees, at a levy of 1% of monthly wages. With 5 to 9 Malaysian employees, registration is voluntary and the rate is 0.5%.
How is the HRD levy calculated and when is it due?
It is (total wages or basic salaries + fixed allowances) × 1% (or 0.5% for voluntary registrants), payable by the 15th of each month to avoid penalties.
The following are deliberately unstated or described only qualitatively until confirmed by a subject-matter expert:
- Current registered-employer, training-provider and total-levy/grant figures — do not state a headcount without a primary HRD Corp annual report or statistics page.
- Exact statutory section numbers in the PSMB Act 2001 for compulsory registration, levy imposition and each penalty — the FAQ gives amounts but not section numbers; confirm against the Akta 612 text before citing 'Section X'.
- The precise definition of 'wages' used for the levy (whether it excludes bonuses, overtime, or employer EPF/SOCSO) — confirm against the official levy guideline / Second Schedule.
- Any grace period for newly liable employers after reaching 10 employees — confirm against an HRD Corp circular before stating.
- Whether the 15% unused-levy-to-MADANI redirection is a recurring annual mechanism or year-specific — confirm current-year status (circulars exist for 2023 and 2024).
- Any current levy-payment exemptions (e.g. an education-industry exemption) — verify exact scope and dates before presenting as active.
Sources
- About Us | HRD Corp — HRD Corp (Pembangunan Sumber Manusia Berhad)
- Employers FAQ | HRD Corp — HRD Corp (Pembangunan Sumber Manusia Berhad)
- Expansion of the Coverage of Pembangunan Sumber Manusia Berhad (PSMB) Act 2001 — Malaysian Institute of Accountants (MIA)
- Circulars | HRD Corp — HRD Corp (Pembangunan Sumber Manusia Berhad)
- Akta Pembangunan Sumber Manusia Berhad 2001 (Akta 612) — Ministry of Human Resources Malaysia (eAkta)
Change history
| Version | Date | Change | By |
|---|---|---|---|
| 01.00 | 14 Aug 2026 | Approved and published. | — |