KUCHING: The federal government has been urged to postpone the implementation of the new minimum wage and give more breathing space to the oil palm industry.
Sarawak Oil Palm Plantation Owners Association (SOPPOA) Chief Executive Officer Dr. Felix Moh stated that oil palm companies in Sarawak are not ready for the implementation of the RM1,500 minimum wage.
“Some employers and industry agreeing to the minimum wage policy that will take effect from May 1 as reported by the Ministry of Human Resource recently manifests that a majority of the business sectors are not favouring it.
“As far as the palm oil industry is concerned the only two companies that agreed to it are both government linked companies (GLCs),” he said in a statement yesterday (April 17).
He added that two weeks ago, a team of 11 associations representing the interests of the Malaysian oil palm supply chain called for the postponement of raising the minimum wage.
Apart from that, it urged the government for a phased implementation to give breathing space to the industry.
“The request for 519,000 foreign workers by the ministry cannot be viewed as good performance on the part of the oil palm sector but a sign of extreme shortage of workers in business sectors.
“There were 2.1 million foreign workers working in Malaysia in 2020, and last year, it went down to 1.1 million workers.
“This indicates that business sectors in the country desperately need at least one million foreign workers to sustain their operations.
“In fact, this requested number (519,000), if materialised, will only be enough to fill half the void,” Moh stated.
Meanwhile, he said SOPPOA members cannot afford to increase the minimum wage despite the high palm oil price as input costs like fertilisers and chemicals have increased by 100 per cent compared to last year.
In addition, all plantation operations are running at less than 50 per cent capacity as there is no improvement on labour intake.
“At the present high cost of production, oil palm plantations in Sarawak may struggle to maintain a positive balance sheet if there is a drastic drop in palm oil price to below RM4,000 per ton.
“GLCs, having backing by the government, presumably are more resistant to economic shock including negative impact financially from a sudden raise of 36 per cent in wage.
“Therefore, it makes good business sense for GLCs to undertake a feasibility study to gather more convincing data on the RM1,500 minimum wage for a period of time before it is gradually implemented on private sectors.
“The industry appreciates the effort contributed by the Human Resource Minister in helping the business sectors in solving the labour crunch.
“Still, we urge the minister to heed the views of the private sectors collectively,” he added.
