New wage hike puts more pressure on East Malaysian firms
KUCHING: The new minimum wage price hike may dampen the economic growth in labour dependent industries such as plantation, construction and manufacturing, all while putting Sabah and Sarawak in a less competitive position compared to Peninsular Malaysia.
The government has standardised the minimum wage for workers in Peninsular Malaysia, Sabah, Labuan and Sarawak at RM1,050, which will be effective come January 1, 2019.
Under the new government’s manifesto, the new minimum wage level is expected to see a growth of 50 to 63 per cent from the level of RM1,000 and RM920 per month in Peninsular and East Malaysia to a standardised level of RM1,500 per month over the next 5 years.
Secretary-general of the Kuching Chinese General Chamber of Commerce and Industry (KGCCI) and Sarawak Business Federation, Jonathan Chai Voon Tok hailed the move as a negative development as he expects it to impact growth and competitiveness of local companies.
“Honestly, I cannot see the rationale for standardizing the minimum wage for the whole country given the fact that we have varying standards of costs of living in different parts of the country.
“The spending power of RM1,050 in Klang Valley is definitely incomparable with that of places like Kota Bahru, Kuantan or other towns in East Malaysia.
“Likewise, with the relatively more expensive materials after taking into the transportation costs, the standardised minimum wages will make the products from Sarawak less competitive,” said Chai, who expected SMEs and traditional family-run businesses in rural areas to be the most impacted by the change.
Concurring with this view, analysts at Public Investment Bank Bhd (PublicInvest Research) pointed out that the effect of the minimum wage hike and standardisation would be different when comparing Peninsular Malaysia to East Malaysia.
“The new minimum wage policy would see negligible impact on plantation players’ operating costs as they are currently providing higher minimum wage levels for their labours – ranging at RM1,200 to RM1,350 per month for basic salary and allowances. Turn to Page B2, Col 2