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MEF Press Release

Budget 2016: Bleak Outlook for EmployersFriday, 23 October 2015
Press Release

​PETALING JAYA, Fri, 23 Oct – The Government’s decision to increase minimum wages would further increase challenges currently faced by the private sector employers.

In responding to the Budget 2016 which was tabled in Parliament today, MEF Executive Director Y.Bhg. Datuk Hj. Shamsuddin Bardan said that the increase in minimum wages would benefit mainly the 2.2 million registered foreign workers and not the local workers.

“Basically, the higher minimum wage rates would result in higher cost to employers and higher remittances made by the foreign workers to their home country – an increase of about RM 5 billion per year to the existing official remittances of about RM30 billion a year,” said Datuk Shamsuddin.

“It is estimated that the additional annual cost on basic wages to employers would amount to about RM3.6 billion per year.”

In the Budget 2016, minimum wages will be raised from RM900 to RM1,000 a month from July 1, 2016 for Peninsular Malaysia while for Sabah and Sarawak, it will be increased from RM800 to RM920.

Datuk Shamsuddin also commented on the decision to increase personal income tax to 26% from 25% for those earning between RM600k‐RM1mil, and to 28% from 25% for those earning over RM1mil “Employers are concerned as the decision to revise the income tax rates for higher income earners would make it difficult for employers to attract and retain talents. Malaysia is no longer seen as competitive with the higher tax rates,” he said.

He said the decision to increase the threshold for SOCSO eligibility for mandatory contribution from a monthly salary of RM3,000 to RM4,000 would also detrimental employers as this would amount to about RM105 million in additional cost to employers.

On the positive side, MEF welcomed the government’s decision to create 60% workforce in TVET by 2020 which is in line with Malaysia’s aspirations to emerge as a developed country.

“However, employers anticipate increased challenges next year as it is obvious that the cost of doing business is much more than the improvements in productivity at average of 3.7 % nually.”

For further information, contact the MEF Secretariat at 03‐7955‐7778 or fax 03‐7955‐9008.

23 OCTOBER 2015

Budget,  Shamsuddin Bardan
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