Soppoa expects adverse effects from minimum wage increase

KUCHING: The new minimum wage to be implemented next year will adversely affect the oil palm industry in Sarawak which is already facing numerous challenges.

Sarawak Oil Palm Plantation Owners Association (Soppoa) said this in a statement Friday.

The Prime Minister’s office on Sept 5 announced the monthly minimum wage of RM1,050 nationwide effective from January 1, 2019.

The statement said that the current low prices of palm oil internationally is a serious challenge to the industry in Sarawak as the bulk of the palm oil is exported. The yield per hectare in Sarawak is around 16 ton per year which is below the national average, despite efforts of the planters and the Malaysian Palm Oil Board (MPOB).

With the lower yield and low prices, oil palm companies operating in Sarawak are just breaking even while others with bank loans and young palms will face difficulties in the coming year.

Soppoa is not against increase in minimum wage but would like it to be implemented with increase in productivity as part of the whole structure.

“The fact that the cost of doing business in Sarawak is much higher compared to other parts of Malaysia and the increase in minimum wage will further erode the competitiveness of Sarawak based companies.

“Currently, the piece rate system which is already widely adopted by a number of companies provides an alternative to the minimum wage system and could even provide higher earnings than stipulated under the minimum wage standard system,” said the association.