Malaysia

Minimum wage will help revamp ‘outdated’ industries, says Malay Chamber

By Shannon Teoh
May 09, 2012

MCCM president Syed Ali Alatas today warned, “If we continue without any revamp, in 10 years, our industry will drag to a halt.” — file picMCCM president Syed Ali Alatas today warned, “If we continue without any revamp, in 10 years, our industry will drag to a halt.” — file picKUALA LUMPUR, May 9 — The new floor wage policy introduced by Putrajaya will help propel the industrial sector forward, half of which “will drag to a halt” in a decade, Malay entrepreneurs said today.

The Malay Chamber of Commerce Malaysia (MCCM) told a press conference today “half of Malaysia’s industry is out-of-date and we must dump them.”

“The minimum wage is a catalyst to revamp industry. Wages must go along with productivity but our industry is outdated, that is why we cannot pay so much and can only pay Bangladeshis.

“If we continue without any revamp, in 10 years, our industry will drag to a halt,” MCCM president Syed Ali Alatas said.

Datuk Seri Najib Razak announced on the eve of Labour Day a monthly base wage of RM900 and RM800 for peninsular and east Malaysia respectively but the move has come under fire from small-medium industries (SMI) and economists who say it will cause unemployment and inflation.

The government began working on a minimum wage policy last year after over a decade of pressure from labour unions during which productivity rose by 6.7 per cent annually but real wages inched up by just 2.6 per cent each year.

But it was delayed as stakeholders continued to pressure the government. SMIs warned that 80 per cent of active businesses could fold under a blanket floor wage, cutting four million jobs from the labour market.

SMIs say they make up 99 per cent of operational companies and employ 59 per cent of all workers as they are the most labour-intensive outfits and will be hardest hit by a hike in wage bills.

The prime minister’s announcement followed the increase of the minimum wage by around 40 per cent in Thailand last month, part of Thai Prime Minister Yingluck Shinawatra’s campaign pledge that helped propel her to win Thai elections last July.

Taiwan’s move to increase minimum pay by five per cent last year also helped President Ma Ying-jeou win a second term in January.

Vietnam will also raise the floor wage for the public sector by 27 per cent in May after enacting a minimum wage increase of as much as 69 per cent in October for both private and state-owned enterprises.

Syed Ali also called on government-linked companies (GLC) not to support declining industries but to do business with competitive firms.

“If not, countries like Thailand and Cambodia will become more modern than us,” he said.

The MCCM held the press conference to announce a roundtable themed “The Review of The Malay Economic Strategic Plan” set for early June to be launched by former Prime Minister Tun Dr Mahathir Mohamad.

“We have hundreds of thousands of graduates who are not employable because we have four million foreign workers we can pay RM400 to RM600.

“So we can only employ skilled locals. So the discussions will be on how to enhance industry so our youth can be skilled because we don’t want to work for RM600,” he said.