Foreign Worker Insurance for Factories in Malaysia: SPIKPA, FWIG and PERKESO Explained

Key Takeaways

• Every foreign worker in a factory needs three things: SPIKPA hospital and surgical insurance, an FWIG insurance guarantee (or a cash security bond) for the permit, and PERKESO registration.
• SPIKPA is cheap and limited. It pays government hospital bills up to RM20,000 a year. It does not cover private hospitals, outpatient visits or accidents outside work.
• FWIG replaces the cash bond that Immigration holds for each worker. The amount depends on nationality and the guarantee must run for at least 18 months.
• PERKESO covers work injuries and invalidity. The employer pays 1.25% for employment injury and 0.5% for invalidity, on top of the worker's own share.
• A worker hostel changes your fire risk. Tell the insurer if people sleep on the premises, and check the hostel meets the housing rules before you rent or buy.

Hiring foreign workers is part of running most factories in Selangor. The permit process forces some of the insurance, but owners are often unsure what each policy actually pays and where the gaps are. This guide explains the compulsory covers from a factory owner's point of view. It is general information: Immigration, PERKESO and the policy wording decide each case, and the rules are updated from time to time.

What insurance must a factory have for foreign workers?

EPF is not insurance, but it is now part of the cost of each foreign worker, so include it when you budget headcount.

What does SPIKPA cover?

SPIKPA (Skim Perlindungan Insurans Kesihatan Pekerja Asing) is the compulsory hospitalisation and surgical scheme for foreign workers. It pays hospital and surgical bills at government hospitals up to RM20,000 per policy year, including room and board and intensive care within the scheme's limits. The premium is fixed under the scheme: insurers' 2026 disclosure sheets show RM120 a year, plus service tax and stamp duty. Workers aged 18 to 60 are eligible.

What SPIKPA does not do:

• It does not pay private hospital bills. A worker taken to a private hospital after an accident may face a bill the scheme will not pay.
• It does not cover outpatient visits. Clinic visits for fever or minor injuries are outside it.
• It has a low annual limit. A serious illness or a long admission can exceed RM20,000.

Many factories add a group personal accident or group hospital and surgical plan for foreign workers to close these gaps, especially where the work involves machinery. Lulu Loke's Q&A on what insurance foreign workers need summarises the compulsory and optional covers.

What is FWIG and how much is it?

Immigration requires a security for each foreign worker. You can place a cash bond, or buy a Foreign Worker Insurance Guarantee (FWIG) from an insurer, which costs a small premium instead of locking up cash. The guarantee must be valid for at least 18 months, and the amount depends on the worker's nationality. Insurers listed these amounts in 2026:

Check the amount on the Immigration portal before you apply, because it can change. FWIG protects the government's cost if a worker has to be repatriated. It does not pay the worker anything.

What does PERKESO cover for foreign workers?

Foreign workers have been under PERKESO's Employment Injury Scheme since 1 January 2019, and under the Invalidity Scheme since 1 July 2024. Employment injury covers accidents at work and on the way to and from work, and occupational diseases. According to PERKESO, the employer contributes 1.25% for employment injury and 0.5% for invalidity, while the worker contributes 0.5% for invalidity. PERKESO is also phasing in 24-hour non-employment injury cover from 1 June 2026. Check PERKESO's contribution table for the exact amounts.

If a registered worker is hurt at work, PERKESO generally pays medical treatment and compensation, and SPIKPA can cover a government hospital admission. If the employer did not register or insure the worker as required, the employer may have to bear the cost and face penalties. See Lulu's answer on who pays when a foreign worker is injured.

Hostels: what changes for your factory insurance?

Many factories house foreign workers in a hostel on site, in a converted mezzanine or in a nearby shophouse. Two things follow:

1. Tell the fire insurer. People sleeping on the premises, cooking and using electrical appliances change the risk. An undeclared change in use can lead to a disputed claim. The factory fire insurance guide explains how occupancy and process affect cover.
2. Check the housing rules before you sign. Worker accommodation has to meet the standards under Act 446. If you are renting a factory and plan to house workers in it, read what tenants must check on Act 446 hostels first.

Tighter foreign labour rules are also pushing some factories towards automation; see what the levy changes mean for factories.

Checklist for factory owners

1. Buy SPIKPA and FWIG (or place the bond) before each permit application or renewal.
2. Register every foreign worker with PERKESO from the first day and pay contributions monthly.
3. Keep copies of the policies and contribution slips with each worker's file for inspections.
4. Decide whether to add group personal accident or hospital cover for private hospital and accident gaps.
5. Tell your fire insurer about any hostel, canteen or change in process.

FactoryHub finds, sells and lets factories; we do not sell insurance. For employee and business insurance, you can contact Lulu Loke, a Great Eastern agent in Klang Valley who handles employee and business insurance for SMEs, or any insurer or agent you already use.

FAQ

Is SPIKPA compulsory for foreign workers in a factory?

Yes. SPIKPA is on the Immigration checklist for foreign worker permits in all sectors except plantation, so a manufacturing employer must buy it for each worker.

What does SPIKPA cover?

Hospital and surgical bills at government hospitals, up to RM20,000 per policy year within the scheme's limits. It does not cover private hospitals or outpatient treatment.

How much is SPIKPA per worker?

Insurers' 2026 disclosure sheets show a fixed premium of RM120 a year per worker, plus service tax and stamp duty.

What is the difference between FWIG and SPIKPA?

FWIG is a guarantee that replaces the cash security bond Immigration holds for each worker. SPIKPA is health insurance that pays the worker's hospital bills. A factory needs both.

Are foreign workers covered by PERKESO?

Yes. Foreign workers have been covered by the Employment Injury Scheme since 2019 and by the Invalidity Scheme since July 2024. The employer contributes 1.25% for employment injury and 0.5% for invalidity.

Do I need to tell my fire insurer about a worker hostel in the factory?

Yes. People living on the premises change the fire risk. Declare the hostel so the policy matches the real use of the building.

Buying or renting, talk to us

FactoryHub is the industrial-only platform of Peter Tan (REN 12771) and Jason Low (PEA 1478), registered with BOVAEP under CID Realtors Sdn Bhd E(1) 1855. We handle both rent and sale, and we co-broke across the whole market, so if the right unit is another agent's listing we will still put it in front of you.

Send us the numbers that decide the shortlist: required amps, built-up area, floor loading, preferred area and target date. We reply with what actually exists, including units that are not advertised publicly. For 800A to 4,000A+ requirements, see high-power factories in Selangor.