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The move comes as the government considers other ways to lift wages, including Progressive Wage Policy subsidies, while the proposed new minimum wage remains under review.
Micro, small and medium enterprises (MSMEs) in Malaysia will be temporarily exempted from any new minimum wage increase, Steven Sim Chee Keong, Minister of Entrepreneur and Cooperatives Development said on 30 September.
According to The Edge Malaysia, the government will instead look at other measures to raise wages in the MSME sector, including wage subsidies under the Progressive Wage Policy. The aim is to ensure wage growth keeps pace with productivity.
“The Cabinet agreed that workers’ wages should continue to rise. However, we also need to protect local businesses, particularly MSMEs, which are facing operating cost pressures and current economic challenges,” Minister Sim said in a statement after the weekly Cabinet meeting, as reported by The Edge Malaysia.
However, government spokesman Datuk Seri Fahmi Fadzil later clarified that the Cabinet had not made a final decision on the new minimum wage rate.
Datuk Seri Fahmi said Prime Minister Datuk Seri Anwar Ibrahim had instructed the government to study several aspects of the proposed increase in greater detail, including its implementation timeline and the groups and sectors that would be affected.
Datuk Seri Fahmi, who is also communications minister, said at a post-Cabinet meeting press conference that no final decision had been made, with the matter to be studied further before any announcement.
The earliest the government could announce the new minimum wage rate would be during the tabling of Budget 2027, scheduled for 9 October.
Malaysia's current minimum wage
Malaysia’s current minimum wage, which took effect in August 2025, stands at RM1,700 a month.
Under the National Wages Consultative Council Act 2011, the minimum wage is required to be reviewed at least once every two years.
The government has also set a longer-term target of a RM3,000 minimum monthly wage by 2030 under the 13th Malaysia Plan, as part of broader labour reforms.
The latest development follows earlier reports that the government was considering an increase to the current minimum wage.
SME groups call for stronger wage support
As cited by The Edge Malaysia, SME Malaysia said the exemption would give MSMEs more room to manage rising operating costs, maintain business continuity, protect jobs and remain competitive.
The association also backed the government’s Progressive Wage Policy, but called for stronger wage incentives and subsidies. These include higher financial support, wider coverage and a simpler application and approval process.
Separately, as further cited in the report, the Small and Medium Enterprises Association of Malaysia (Samenta) described the decision as timely, saying it would help protect the livelihoods of 1.3mn SMEs nationwide.
The association also called on the government to address structural costs, including compliance, regulatory, logistics and utility expenses. It urged the government to expand access to low-interest working capital financing to help businesses manage costs and support wage increases.
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Lead image / The Star
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