KUALA LUMPUR (Sept 30): The Federation of Malaysian Manufacturing (FMM) wants the government to clarify the exemption of micro, small, and medium enterprises (MSMEs) from an upcoming minimum wage increase and provide support of its implementation.
In a statement on Wednesday, FMM president Jacob Lee Chor Kok said the federation welcomes the relief announced by Entrepreneur Development and Cooperatives Minister Steven Sim Chee Keong but the government must specify eligibility criteria, commencement date, duration and review conditions for qualifying MSMEs.
"Employers and workers also need clarity on whether the measure represents a deferment to a later implementation date or an exemption subject to specified review conditions," Jacob said.
The federation said smaller manufacturers face severe constraints in passing higher costs to customers, particularly when competing in export markets or operating under existing supply contracts.
It added that a minimum wage hike would impact salary structures that differentiated staff members based skills, experience and responsibility.
"Clear rules will help businesses plan payroll commitments, investment and hiring, while giving workers certainty about their entitlements," Jacob said.
FMM stressed that the exemption from a future minimum wage increase must not be interpreted as permission to reduce existing wages or disregard the prevailing statutory wage floor.
It urged the government to complement the exemption with practical assistance for automation, digitalisation, skills upgrading, and process improvements, alongside accessible wage subsidies under the Progressive Wage Policy.
"Giving businesses greater capacity to reinvest would help translate temporary cost relief into lasting productivity improvements and better employment opportunities," Jacob said.
It also proposed incorporating a Smart Manufacturing Support Package, a competitive tax framework for qualifying SMEs, and industry-led training support in Budget 2027 to build long-term capacity.
FMM called on the National Wages Consultative Council to consider manufacturers outside the MSME category, noting that company size alone does not determine profitability or the capacity to absorb a wage increase.
According to FMM's Business Conditions Survey for 1H2026, 96% of respondents experienced higher production costs alongside weaker manufacturing conditions and softer demand.
"The announced relief should provide breathing space for MSMEs to strengthen their operations, accompanied by practical support for workers to progress to better wages," Jacob said.