Minimum Wage Increases for Micro Enterprises in Malaysia Deferred to July 2023

Micro enterprises in Malaysia will not be required to implement the new minimum wage until July 2023. Eligible businesses must have less than five employees to qualify.

Malaysia increased the national minimum wage in May 2022 by 25 percent from 1,200 ringgit (US$273) to 1,500 ringgit (US$341), however, employers with less than five employees were granted an exemption to the hike until January 1, 2023, before being extended again to July 2023.

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Micro enterprises in Malaysia (employers with less than five employees) will not be required to implement the minimum wage rates until July 2023. Malaysia increased the national minimum wage in May 2022 by 25 percent from 1,200 ringgit (US$273) to 1,500 ringgit (US$341) for businesses in all sectors, regardless of region. The minimum wage was last increased in February 2020.

However, employers with less than five employees were granted an exemption to the hike until January 1, 2023. This has been extended again to July 1, 2023. 

Human resources minister V. Sivakumar stated that the postponement was done in anticipation of businesses facing financial challenges in 2023.

The new minimum wage

The new minimum wage equates to the following for workers in city council or municipal council areas.:

• 57.69 ringgit (US$13.13) per day for employees working six days per week;
• 69.23 ringgit (US$15.76) per day for employees working five days per week; and
• 86.54 ringgit (US$19.70) per day for employees working four days per week.

For employers with less than five employees located in a city council or municipal area, the monthly minimum wage is 1,200 ringgit (US$273), until July 2023.

This equates to the following:

• 46.15 ringgit (US$10.51) per day for employees working six days per week;
• 55.38 ringgit (US$12.61) per day for employees working five days per week; and
• 69.23 ringgit (US$15.76) per day for employees working four days per week.

For employers with less than five employees located in an area other than a city council or municipal area, the monthly minimum wage is 1,100 ringgit (US$273), until July 2023.

An employer with business activities classified under the Malaysia Standard Classification of Occupations (MASCO) must pay the 1,500 ringgit (US$341) wage rate, regardless of the number of employees they employ.

Malaysian economic outlook 2023

Malaysia’s economy is expected to grow at a moderate rate of between four to five percent in 2023. Malaysian financial services provider Malaysian Industrial Development Finance (MIDF) believes the country will continue to benefit from its commodity exports – the backbone of Malaysia’s economy – especially petroleum, palm oil, and liquid natural gas as the prices of Brent crude oil and crude palm oil are expected to stay elevated for 2023.

However, even as economic growth moderates, the cost-of-living issues will continue to persist. A resurgent dollar, escalating import costs, rising interest rates, increasing food prices, and hefty subsidies are some immediate challenges for Anwar Ibrahim’s new government.

The new government’s 2023 national budget, which is expected to be tabled on February 24, is expected to focus on boosting small and medium-sized enterprises, expediting priority national projects, and ramping up the country’s participation in the green economy.   

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