The Malaysian Employers Federation has welcomed the minimum wage exemption for eligible MSMEs but stressed the need for clear implementation guidelines.
KUALA LUMPUR: The Malaysian Employers Federation (MEF) has welcomed the proposed exemption of micro, small and medium enterprises (MSMEs) with annual sales turnover below RM50 million from the minimum wage increase, but stressed the need for clear implementation guidelines.
In a statement today, MEF Senior Advisor for Government, Media and International Engagement Datuk Dr Syed Hussain Syed Husman said the exemption recognised the differing financial capacities of businesses, particularly smaller enterprises that might struggle to absorb higher operating costs.
Under Budget 2027 announced by the Prime Minister Datuk Seri Anwar Ibrahim on Friday, the national minimum wage is scheduled to increase from RM1,700 to RM2,000, effective June 1, 2027, while eligible MSMEs with annual sales turnover below RM50 million would be exempt from the increase.
Syed Hussain said the proposal would give smaller businesses breathing space to strengthen operations, improve productivity and prepare for future wage adjustments without compromising their financial sustainability.
“MEF recognises that improving workers’ incomes is an important national objective. However, wage policies must also consider the financial resilience of employers, particularly MSMEs, which play a critical role in employment generation, supply chains and the overall economic development of Malaysia,” he said in the statement.
He explained that higher wages would also increase related employment costs, including statutory contributions, overtime payments and other wage-linked expenses, making it important for businesses to have sufficient time and capacity to adjust.
Therefore, Syed Hussain said the exemption should be accompanied by clear eligibility criteria, effective communication and practical support for affected businesses to ensure the policy could be implemented smoothly.
He also urged the government to monitor the policy’s impact on employment, wage levels and business performance to ensure the intended benefits were achieved without placing undue pressure on hiring or business continuity.
On measures to strengthen MSMEs under Budget 2027, MEF welcomed measures to strengthen MSMEs, including an increase in financing facilities and guarantees to RM57 billion in 2027 from RM50 billion in 2026, as well as a proposed one-percentage-point reduction in MSME income tax rates expected to benefit about 300,000 businesses.
MEF also recognised initiatives to strengthen MSMEs under the budget, including an increase in financing facilities and guarantees to RM57 billion in 2027 from RM50 billion in 2026, as well as a proposed one-percentage-point reduction in MSME income tax rates expected to benefit about 300,000 businesses.
Similarly, the federation welcomed a RM30 million allocation to help 4,000 MSMEs adopt artificial intelligence (AI) and automation, saying such initiatives could help businesses improve efficiency and competitiveness.
“MEF urges the government to ensure that these measures are implemented efficiently, with straightforward application procedures, transparent eligibility criteria and timely disbursement of approved financing and assistance,” the statement read.
Syed Hussain also emphasised MEF looked forward to strengthening its collaboration with the Ministry of Entrepreneur and Cooperatives Development (KUSKOP) through regular consultations to ensure policies better address business needs while supporting business sustainability and workers’ welfare.