Malaysia introduces minimum wage for the first time

Malaysia announces minimum wage but will it hurt the region's competitive edge?

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Malaysia has introduced a minimum wage for the first time in a move to support low income households and amid speculation that the government may call elections soon.

Private sector workers in peninsular Malaysia will receive a minimum salary of 900 ringgit ($297; £183) a month.

Workers in the states of Sabah and Sarawak will get 800 ringgit.

Malaysia, South East Asia's third-largest economy, has set a target to achieve rich nation status by 2020.

"The introduction of the minimum wage is a historic moment for Malaysia," said Prime Minister Najib Razak.

"The lowest-paid will now be guaranteed an income that lifts them out of poverty and helps ensure that they can meet the rising cost of living."

Too high?

While the move is likely to be welcomed by workers and low income families, some critics believe that smaller businesses may be hurt by it.

"The 900 ringgit level is too high for those in small towns and remote villages," said Shamsuddin Bardan director of the Malaysian Employers' Federation.

Mr Bardan added that the scheme will result in wages rising between 40% to 90% in places such as Sabah and Sarawak increasing the cost of doing business there.

"We feel the situation will be better managed if wages are linked to productivity and skills of employees," he said.

Prime Minister Najib Razak said that small businesses will be given a one-year grace period to adjust to the new system.

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