Minimum wage of RM1,500 a month will hurt sector: Sime Darby Plantation

PETALING JAYA: Sime Darby Plantation Bhd, the world’s largest oil palm company by planted area, expects the proposed increase in the monthly minimum wage to RM1,500 to have adverse financial consequences for the plantation industry.

Executive deputy chairman and managing director Tan Sri Mohd Bakke Salleh said the proposal, if implemented, would raise labour cost’s contribution to total production cost to 35% from 26%.

“This translates into an additional cost of RM185 per tonne,” he told a media briefing on the company’s third-quarter financial performance here yesterday.

He said Sime Darby Plantation and other players in the industry are currently working on an application to submit to the government to address the concern on minimum wage.

“(If implemented) I hope this (RM1,500 minimum wage) will not be made compulsory or it could have adverse financial consequences,” he added.

Pakatan Harapan in its 14th general election manifesto pledged to increase the monthly minimum wage to RM1,500.

Mohd Bakke said another area of concern for Sime Darby was the pledge to reduce the number of foreign workers.

He said plantation is a labour-intensive industry and foreign workers make up 70% of the total workforce in the industry. Therefore, any disruption to the labour force would have a significant impact on the industry.

“Even though Sime Darby Plantation has achieved 85% progress on automation but you can only do so much with mechanisation,” Mohd Bakke added. – Bernama