HRD Corp isn't waiting for you anymore.
Your unused levy is already being taken, twice now.

Most Malaysian employers know the HRD levy rule the old way: use it within 24 months or lose it. That rule still exists. It’s not the one that should worry you right now.

Since March 2025, HRD Corp has been running a separate, faster mechanism. If your unused levy balance sits above RM50,000 at year-end, and you’ve used less than half of what you were allocated that year, HRD Corp deducts 15% of the unused portion and pools it into Program Latihan MADANI, its own industry training fund. There’s no opt-out. And it isn’t a future risk to plan around. It’s already happened. Twice.

The rule you think you know isn’t the one that’s active

Every company with 10 or more employees pays into the HRD levy automatically: 1% of monthly wages, no exceptions. The old assumption was simple. Spend it within 2 years, or forfeit whatever’s left. Balances under RM10,000 are exempt from that forfeiture, which is part of why most finance teams filed the whole thing under “eventually.”

That 2-year clock still runs. But it’s no longer the thing that determines whether your unused levy gets touched. The 15% deduction is assessed annually, not every 2 years, and it doesn’t care whether you’re still inside your forfeiture window. A company sitting comfortably at month 14 of its 24-month runway can still get hit, because the clawback isn’t measuring time. It’s measuring utilisation.

What actually happened, twice

This isn’t a policy that exists on paper and hasn’t been enforced. HRD Corp has applied the 15% deduction 2 years running, each round set out in its own employer circular, published on hrdcorp.gov.my. The circulars say it plainly in their titles: the 15% from the remaining unused levy balance goes to Program Latihan MADANI.

We haven’t found a circular confirming a third deduction on 2025 balances yet, and we’re not going to pretend one’s coming. What we can say with certainty is that HRD Corp has now built and executed this mechanism 2 years running. A one-off penalty is a footnote. A repeated one is a pattern, and patterns are what finance teams should be planning around.

Why “we’ll get to it” is the expensive answer now

Here’s the part that catches most HR and finance teams off guard: the levy sitting in your HRD Corp account isn’t dormant capital waiting for you to decide when to use it. It’s an asset with an annual performance test attached, and the test isn’t generous. Cross RM50,000 unused and fall under 50% utilisation, and a slice of it simply isn’t yours anymore by the time the next circular lands.

Most companies don’t under-spend their levy because they don’t know it exists. They under-spend it because the training on offer doesn’t feel worth scheduling around, or because nobody owns the number until an auditor or a circular forces the question. Neither of those is a budget problem. Both are training problems, and training problems have a straightforward fix: run training people actually complete.

HRD Corp already took 15% of what you didn’t spend. Twice.

The only decision left is whether it happens a third time.

Why the levy sits unspent

Low utilisation isn’t laziness. It’s a visibility problem. Microsoft’s 2026 Work Trend Index found only 32% of Malaysian AI users say their leadership is clearly aligned on AI strategy. If nobody can see what’s actually being learned, nobody can point the levy at it with confidence, and it sits there until HRD Corp measures it for you.

The wider Malaysian picture backs this up. AWS-commissioned research published in November 2025 found 2.4 million Malaysian businesses now use AI, but only 10% use it “to a significant degree.” 73% remain stuck at basic-application level. Asked why, employers named skills shortage as the top barrier at 52%, ahead of regulatory clarity at 49% and cost at 39%. Cost isn’t the blocker. Structured capability is. Globally, PwC’s 2026 AI Jobs Barometer put a number on what that capability is worth: workers with AI skills now command a 62% average wage premium, up from 57% the year before. The money argument and the skills argument point the same direction.

Turning the levy into training that counts

None of this means the levy is a lost cause. It means the levy is a use-it number now, checked every year, and the fastest way to move that number is training people actually finish and can be shown to have finished.

SkillTrainer AI is HRD Corp registered and claimable under SBL-Khas. Our corporate AI training in Malaysia is built around assessment, not just content: people apply AI to real workplace tasks, get evaluated on it, and the analytics dashboard gives HR and finance a clean utilisation record, the exact figure HRD Corp is now measuring against that 50% threshold. That’s not a workaround for the clawback. It’s the plainest way to make sure the number HRD Corp checks every year is one you’re already ahead of.

If your levy balance is sitting above RM50,000 and you’re not sure what your utilisation rate looks like right now, that’s the number worth checking before the next circular does it for you.