Minimum wages order will increase production cost, says MPMA

KUALA LUMPUR, Dec 31 (Bernama) -- The implementation of the Minimum Wages Order -- RM900 for Peninsular Malaysia and RM800 for Sabah and Sarawak – is expected to have an impact on the production cost for plastics manufacturers.

"Labour cost is a major cost component for our industry. With the minimum wages in place, our direct labour cost will increase by 30 per cent to 40 per cent. This will push up our manufacturing cost," said Datuk Raymond Sng, Vice-President of the Malaysian Plastics Manufacturers Association (MPMA).

In addition, the price of resins, which forms a major portion of the manufacturing cost of plastics products, has increased quite substantially over the last few months, he said.

"The increase in labour cost and prices of plastic resins would adversely affect our business operations," Sng said in a statement.

He said the association had no objection to the implementation of the minimum wages, however, the manufacturers require more time to make the necessary changes such as process automation and retrain the workers to increase their productivity and efficiency to mitigate the impact of wage increase.

"A grace period of at least one year is needed for the manufacturers to make the necessary adjustment," he said, adding that there are insufficient local workers in the plastic industry.

In addition to the RM900 basic wages, he said employers have to bear the cost of levy, hostel and utilities, Fomema medical check-up, insurance fees and return air-ticket (after three years) when employing foreign workers, which worked out to an additional of about RM300-RM350 per worker per month.