Sabah entrepreneurs groan over new minimum wage

Julia Chan
The new minimum wage will still burden Sabah companies already struggling with the higher cost of doing business, said businessmen from the state. — Picture by Yusof Mat Isa

KOTA KINABALU, Sept 8 — The new minimum wage, although a step down from the RM1,500 to RM1,050, will still burden Sabah companies already struggling with the higher cost of doing business, said Sabah businessmen.

Datuk Wong Khen Thau, chairman of the Sabah chapter of the Malaysian International Chamber of Commerce and Industry (MICCI), said the difference in the minimum wage rate between East Malaysia and the peninsula was indicative of the struggles they were facing.

“All this while we have been at a disadvantage. That is why there has always been a difference.

“We feel that although it is a fair rate for Sabah now, to take away the government subsidy means the onus is on the companies to fork out the entire RM130 instead, which isn’t fair for Sabahan businesses who have to compete with West Malaysian prices,” he said.

The current minimum wage is RM1,000 in Peninsular Malaysia and RM920 in Sarawak and Sabah.

The Cabinet announced on Wednesday that the new standard minimum wage of RM1,050 a month, or RM5.05 per hour, will be implemented nationwide on January 1, 2019. Putrajaya also said that the government will not provide any subsidies to employers.

Wong said that they will propose to the government to subsidise a portion of the difference — RM50 — which he said will leave companies to come out with RM80.

“I think that would be fair to all,” he said, adding that the council will look into forwarding their proposal to the government soon.

Previously, the council had proposed that the minimum wage be revised to RM1,100 instead of RM1,500, but with a government subsidy of RM100 to be paid directly to employees while the company covers the balance.

Reuben Lim, a developer and former hotelier, said that the rate of the new minimum wage in Sabah will not be beneficial to anyone given that businesses will likely just pass the added cost on to consumers.

“Currently, most of any rise in the production process is directly transferred to the consumer. So, you give someone more money and they end up paying more for their essentials anyway. That’s not how it’s supposed to work,” he said.

“Some should ask why there was no significant reduction in prices once the GST was rated at zero per cent. Yes, we didn’t pay the tax at the register anymore, but the raw materials were also exempt; therefore, there should have been a decrease in pricing too.

“It is going to go up again after the SST is included,” he said.

Lim said that the increase in prices will be tough on small and medium enterprises in Sabah and will prevent cottage industries from developing.

“This high cost of production is not helping anyone start a business,” he said.

Sabah Employers Association president Yap Cheen Boon said that although the increment was not as high as expected, they wanted to know how the government arrived at the same figure for the entire country which was not equal in economic progress.

“Malaysian Industrial Development Finance Berhad (MIDF) estimated in July 2018 that while Malaysia as a whole will reach its aspired 2020 target by 2022, both manufacturing powerhouses Selangor and Penang will achieve it this year (two years earlier).

“While Sabah places emphasis on the oil and gas and agriculture sectors, it will only achieve the target 21 years later, in 2041,” he said.

He said that the government should focus on equal economic progress before standardising a minimum wage.

He added that his association and other stakeholders had not been consulted.

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