Why Register with HRD Corp: Legal Compliance and Business Growth Benefits

by | Aug 1, 2025 | HRDCorp

If you’re running a business in Malaysia, you’ve probably heard about HRD Corp, but do you know why register with HRD Corp is not only beneficial but also necessary for many employers?

Let’s unpack what HRD Corp is, why registration is required, and how it can actually be a powerful advantage for your business.

1. It’s the Law, Mandatory Under the PSMB Act 2001

First and foremost, registration with HRD Corp is required by law. Under the Pembangunan Sumber Manusia Berhad Act 2001 (PSMB Act 2001), all companies in Malaysia that employ 10 or more Malaysian employees must register with HRD Corp.

This isn’t optional, it’s a legal obligation. Failure to comply can result in serious penalties:

  • Fines up to RM10,000
  • Imprisonment up to one year
  • Or both

Even companies with 5 to 9 Malaysian employees are encouraged to register voluntarily to enjoy the benefits, though it is not legally required for them.

2. Monthly HRD Levy: What It Means for Your Company

Upon registration, employers are required to contribute a monthly levy to HRD Corp:

  • 1%of each employee’s monthly wages (plus fixed allowances) for mandatory registrants
  • 5%for optional registrants (companies with 5–9 employees)

This levy may seem like an added cost, but it’s actually a long-term investment in your company’s growth. And here’s why.

3. Access to Training Grants and Skills Development Support

The real benefit kicks in when you start utilizing HRD Corp’s training grant system.

Once you’re registered and actively contributing, your company becomes eligible to claim training grants to cover the cost of:

  • Technical or soft-skills training
  • Certification programs
  • Upskilling or reskilling courses tailored to your industry

This means you can upskill your employees without bearing the full financial burden, making your workforce more agile, productive, and future-ready.

4. Boosting Productivity, Innovation, and Competitiveness

When companies make full use of HRD Corp’s programs, they don’t just train employees they strengthen their entire business.

Registered employers can:

  • Access a broad ecosystem of certified training providers
  • Stay ahead of industry shifts and digital transformation
  • Reduce turnover by offering meaningful growth opportunities to staff

HRD Corp’s training ecosystem is aligned with national economic goals, helping SMEs and large enterprises alike to thrive in a fast-changing market.

5. Avoiding Penalties and Staying Compliant

Lastly, staying compliant with the law avoids unnecessary risk and reputation damage. Companies that ignore the mandatory registration requirement may face:

  • Audits
  • Legal notices
  • Sanctions that affect operational continuity

By simply registering and fulfilling your obligations, you avoid all of this while also gaining access to a range of business-enhancing tools.

Conclusion

Understanding why register with HRD Corp is essential for any business in Malaysia. It’s not just about checking a legal box, it’s about embracing a framework that:

  • Strengthens your workforce
  • Enhances your business capabilities
  • Aligns with national development goals

So, whether you’re a growing SME or an established enterprise, registering with HRD Corp is a step toward smarter, more sustainable business growth.

References

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