What Is HRDF (HRD Corp) and Why It Matters to Employers in Malaysia

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Published On: 16/12/2025By yunice

In today’s fast-changing business environment, talent development is no longer optional. Employers that invest in structured training and upskilling not only improve productivity but also strengthen retention, compliance, and long-term competitiveness.

In Malaysia, the government supports employer-led workforce development through the Human Resources Development Fund (HRDF), now officially known as the Human Resource Development Corporation (HRD Corp).

This article explains what HRDF (HRD Corp) is, how it works, and why it is critical for employers, with practical insights for HR teams and business owners managing payroll, compliance, and training budgets.

What Is HRDF (HRD Corp)?

The Human Resources Development Fund (HRDF) was established in 1993 under the Human Resources Development Act 1992 to encourage Malaysian employers to invest in structured employee training.

In 2021, HRDF was rebranded as the Human Resource Development Corporation (HRD Corp) to reflect its expanded role in national workforce development.

HRD Corp operates under the Ministry of Human Resources (MOHR) and manages a central training fund collected through employer levy contributions. These contributions can later be claimed by employers to subsidise or fully fund approved training programmes.

In simple terms:

Employers contribute → HRD Corp pools the funds → Employers claim training costs back.

How HRD Corp Works

HRD Corp functions on a levy-and-claim model:

Eligible employers contribute a monthly levy based on employees’ wages
Contributions are credited into the employer’s HRD Corp account
Employers use these funds to claim approved training programmes

The objective is clear: encourage continuous learning while reducing the financial burden of employee development.

For HR teams, this means training budgets no longer need to rely entirely on company cash flow when HRDF funds are properly utilised.

Why HRD Corp Is Important for Employers

1. Improves Employee Skills and Productivity

Structured training ensures employees remain competent, compliant, and aligned with industry standards. This directly improves:

Operational efficiency
Work quality and consistency
Team collaboration and performance

A skilled workforce delivers measurable business results.

2. Reduces Training Costs

HRD Corp allows employers to offset training expenses using levy contributions that would otherwise remain unused.

Instead of treating training as a cost, employers can treat it as a recoverable investment.

3. Ensures Statutory Compliance

Under the Pembangunan Sumber Manusia Berhad (PSMB) Act 2001, certain employers are legally required to:

Register with HRD Corp
Contribute monthly levy
Maintain proper training records

Non-compliance may result in penalties, while compliance unlocks valuable training incentives.

4. Supports Business Growth and Competitiveness

Well-trained employees contribute to:

Better customer experience
Stronger leadership pipelines
Higher innovation capability
Scalable operations

This positions businesses to grow sustainably in a competitive market.

5. Improves Employee Retention

Employees are more likely to stay when employers invest in their growth.

Training programmes supported by HRD Corp help:

Increase job satisfaction
Reduce turnover
Strengthen employer branding

Retention directly lowers recruitment and onboarding costs.

6. Access to Diverse Training Programmes

HRD Corp works with a wide range of registered training providers, offering programmes such as:

Leadership and management development
Digital transformation and automation
Technical and compliance training
Industry-specific certifications

This allows employers to tailor training plans based on real operational needs.

Which Employers Must Register with HRD Corp?

Employers are generally required to register with HRD Corp if they:

Employ 10 or more Malaysian employees, and
Operate within sectors covered under HRD Corp regulations

Registration ensures compliance and allows employers to fully utilise levy contributions instead of letting them expire.

How Employers Can Maximise HRD Corp Benefits

To fully leverage HRD Corp, employers should:

✔ Assess Training Needs Regularly

Identify skills gaps and align training with business objectives, such as automation, leadership development, or compliance requirements.

✔ Plan Training Around Business Cycles

Schedule training during lower operational periods to minimise productivity disruption.

✔ Stay Updated on HRD Corp Schemes

HRD Corp periodically introduces new grants, incentives, and special programmes to support workforce development.

✔ Encourage Employee Participation

Promote a learning culture by linking training to career progression, performance reviews, or internal mobility.

✔ Work with Registered Training Providers

Only HRD Corp-approved providers are eligible for claims, ensuring quality and compliance.

✔ Maintain Accurate Records for Claims

Training applications, attendance, and claims must be properly documented to avoid rejection or delays.

Managing HRD Corp Training Efficiently with Pandahrms

While HRD Corp provides the funding framework, employers still need strong internal HR systems to manage training effectively.

Pandahrms helps employers streamline HRD Corp-related processes by:

Tracking employee training records and history
Centralising employee data for HRD Corp reporting
Aligning training with payroll and attendance records
Reducing manual tracking errors and compliance risks
Supporting better workforce planning through accurate HR data

With Pandahrms, HR teams gain better visibility and control over training investments — ensuring HRDF funds are fully utilised and properly managed.

Conclusion: Turn HRDF Contributions into Strategic Advantage

HRDF (HRD Corp) is not just a statutory requirement — it is a strategic tool for employers to build a skilled, productive, and future-ready workforce.

When training is planned properly and supported by a reliable HR system like Pandahrms, employers can: