ALOR STAR: Kedah business groups have welcomed the government's decision to raise the minimum wage from RM1,500 to RM1,700, saying it ensures a more comfortable life for the people while boosting spending power.
Kedah Malay Chambers of Commerce (DPMM) charter president Datuk Mohd Zayad Md Ismail praised the move, highlighting that economic restructuring can only be considered successful when wages allow people to live more comfortably.
However, he argued that the RM1,700 minimum wage is still relatively low, especially when taking into account the cost of living in major cities.
"Implementing a minimum wage of RM1,800 to RM2,000 per month, in my opinion, is a reasonable figure given the current economic climate and living costs.
"Furthermore, if we compare our wage rates to other countries, ours are significantly lower. Any increase in disposable income will undoubtedly have a positive impact on the domestic economy," he said in a statement today.
Zayad said increasing wages and household income would contribute to economic recovery and growth as domestic demand rises, benefiting small and medium-sized enterprises (SMEs).
"Wage increases will also boost demand for various goods and services through the multiplier effect. Raising wages can also encourage industries to shift towards less labour-intensive approaches, focusing more on skills and technology," he added.
Despite the benefits, Zayad expressed concerns about higher operating costs for employers, particularly smaller businesses, and that rising labour costs could lead to inflation.
He urged the government to offer incentives to help small businesses adjust, such as financial support and technical assistance, while also ensuring tighter control over market prices.
Zayad also called for greater flexibility in the implementation timeline for businesses with fewer than 10 employees, proposing an extension beyond the current six-month period to ease the transition.
"Employers who can afford to pay more than the minimum wage should do so as a proactive measure to support their workers in managing living costs. This step not only fulfils social responsibility but can also enhance productivity and motivation," he added.
This sentiment was echoed by the Kedah Chinese Chamber of Commerce and Industry's deputy president Ong Kheng Teong, who assured that many larger businesses are prepared for the implementation, while acknowledging the challenges smaller businesses face.
"The minimum wage will mainly affect SMEs, as large companies such as multinationals already pay more than RM1,700, so it's not a problem.
"But for SMEs, especially in labour-intensive sectors, it's quite difficult. However, I must stress that this a timely move as the RM1,500 minimum wage is far too low."
He said businesses in lower-income states like Kedah may face pressure, as business activity in certain areas is not as robust as in major cities.
"Therefore, we urge state and federal governments to work on creating a business-friendly environment in areas outside major cities," he added.
Prime Minister Datuk Seri Anwar Ibrahim announced the wage increase during the tabling of the 2025 Budget in Parliament yesterday, clarifying that it will apply to employers with five or more employees.