KUALA LUMPUR (Sept 30): Micro, small and medium enterprises (MSMEs) will be temporarily exempted from any new minimum wage increase, Entrepreneur and Cooperatives Development Minister Steven Sim Chee Keong said on Wednesday.

The government will instead take other measures to help raise wages in the MSME sector, including wage subsidies under the Progressive Wage Policy, to ensure wage growth keeps pace with productivity, Sim said.

“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,” Sim said in a statement after the weekly Cabinet meeting.

However, government spokesman Datuk Seri Fahmi Fadzil later said the Cabinet had not made a final decision on the new minimum wage rate.

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.

“There is no comprehensive decision today, only an instruction for the matter to be studied first before any announcement is made,” Fahmi, who is also communications minister, told a post-Cabinet meeting press conference.

He said the earliest the government could announce the new minimum wage rate would be during the tabling of Budget 2027, scheduled for Oct 9.

Malaysia’s current minimum wage of RM1,700 a month took effect in August 2025. 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 targeted a minimum monthly wage of RM3,000 by 2030 under the 13th Malaysia Plan as part of broader labour reforms.

SME Malaysia in a statement 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, including higher financial support, wider coverage, and a simpler application and approval process.

SME Malaysia will hold a joint press conference with the Malaysia Retail Chain Association on Friday to discuss the minimum wage issue and release survey findings on businesses’ cost pressures, ability to absorb higher wages and views on government support.

Meanwhile, the Small and Medium Enterprises Association of Malaysia (Samenta) called the decision timely, saying it would protect the livelihoods of 1.3 million SMEs nationwide in its statement. It also urged the government to address structural costs such as compliance, regulatory, logistics and utility expenses, while expanding access to low-interest working capital financing to help businesses raise wages.