KUALA LUMPUR, Sept 30 — The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) has welcomed the government’s decision to temporarily exempt micro, small and medium enterprises (MSMEs) from an upcoming minimum wage increase, saying the move would provide financial relief to about 1.3 million businesses.

In a statement today, ACCCIM president Datuk Ng Yih Pyng said MSMEs had faced multiple cost increases over the past two years amid a challenging business environment and growing competition from foreign businesses.

“The exemption will provide a timely and much-needed financial relief to about 1.3 million MSMEs,” Ng said.

ACCCIM said the Cabinet had agreed to exempt MSMEs from the upcoming minimum wage increase for the time being, following an announcement by Entrepreneur and Cooperatives Development Minister Steven Sim. Reports on the announcement said Sim raised the matter at the Cabinet meeting before the exemption was agreed. 

Ng said an appropriate minimum wage should balance improvements in workers’ incomes against the ability of smaller businesses to remain viable.

He warned that a one-size-fits-all increase could force some small businesses to cut staff or close, and said wage growth should instead take into account productivity, performance, the financial capacity of individual sectors and wider economic and business conditions.

The chamber also backed a productivity-linked wage system, under which workers’ pay would be tied more closely to output, performance or company profits.

It said such a model could reward productivity and allow employees’ incomes to rise alongside company profitability, while helping employers align labour costs more closely with actual revenue.

ACCCIM also welcomed the government’s decision to consider other ways of raising wages among MSME workers, including subsidies under the Progressive Wage System (PWS).

According to the statement, the voluntary, incentive-based programme has benefited 51,363 workers, exceeding its initial target of 50,000, with more than RM73 million disbursed.

The chamber said about RM10.2 million had gone towards entry-level workers and RM62.9 million to non-entry-level workers.

The Human Resources Ministry describes the Progressive Wage Policy as an initiative intended to increase workers’ incomes in tandem with productivity gains. 

ACCCIM also reiterated its call for the government to consider a tiered regional minimum wage system rather than a single nationwide rate.

“A uniform national minimum wage cannot be one-size-fits-all,” the chamber said, arguing that wage levels should take into account differences in living costs, socioeconomic conditions and economic development between states.

It said a regional approach could allow higher wages in more expensive areas while reducing pressure on low-margin businesses operating in economically weaker regions.

Malaysia’s current minimum wage of RM1,700 a month was introduced on February 1, 2025 for employers with five or more workers and those carrying out professional activities, before taking full effect for all employers from August 1, 2025.