PETALING JAYA: The Federation of Malaysian Manufacturing (FMM) has welcomed the government’s decision to exempt micro, small and medium enterprises (MSMEs) from the next minimum wage increase for now, but wants clear guidelines on the scope and duration of the relief.
Its president Jacob Lee Chor Kok said the government should clarify the definition of qualifying MSMEs, eligibility criteria, commencement and duration of the exemption, as well as how it would be reviewed.
“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,” he said in a statement on Wednesday (Sept 30).
Lee said smaller manufacturers faced constraints in passing higher costs on to customers, particularly when competing in export markets or operating under existing supply contracts.
“A minimum wage increase also affects the wider salary structure as employers seek to maintain meaningful wage differences for skills, experience and responsibility,” he said.
He said FMM’s Business Conditions Survey for the first half of 2026 found that 69% of respondents experienced higher production costs, alongside weaker manufacturing conditions and softer demand.
Lee also stressed that the exemption from a future increase should not be interpreted as permission to reduce existing wages or disregard the prevailing statutory wage floor.
“The Progressive Wage Policy should be supported by accessible wage subsidies for eligible manufacturing MSMEs, alongside practical assistance for automation, digitalisation, skills upgrading and improvements in production processes,” he said.
Meanwhile, Small and Medium Enterprises Association of Malaysia (Samenta) president Datuk William Ng welcomed the Cabinet decision to exempt SMEs from further increases in the minimum wage, saying it would protect the livelihood of 1.3 million SMEs nationwide amid persistent cost increases, compressed margins and global economic uncertainties.
“Sustainable wage growth must be anchored on value creation and productivity gains,” he said, adding that Samenta strongly endorsed the government’s focus on the Progressive Wage Policy.
Ng urged the government to partner with industry associations to deliver rapid, SME-centric training modules to support productivity gains.
“Wage policy cannot be viewed in isolation. To foster capacity for higher pay, the government should continue addressing structural overheads, such as compliance costs, regulatory burdens, and logistics and utility costs, alongside expanding access to low-interest working capital financing,” he said.
Despite the exemption, Ng urged SMEs that could afford higher wages to offer them to employees to help retain talent and foster a loyal, motivated workforce.
He said Samenta remained committed to working with the Entrepreneur Development and Cooperatives Ministry, Human Resources Ministry and other relevant ministries to help SMEs transition into high-productivity, high-value enterprises capable of offering competitive, living wages.
