Malaysia emphasises human capital in 2016 budget

Author: PM editorial | Date: 28 Oct 2015

Minimum wage increase and focus on employee training shows commitment to the workforce

The Malaysian government has outlined commitments to invest in the country’s professional sector with its 2016 budget, allocating money to increasing the minimum wage, and supporting new L&D and training programmes for workers.
Minimum wage workers in Malaysia will see their pay rise in the next year, from RM900 to RM1000 per month, and from RM800 to RM920 per month for those in Sabah, Sarawak and Labuan.
The new minimum wage will be implemented across all sectors apart from domestic services, which will not be affected by the change. Wage earners are likely to benefit from a higher disposable income, while businesses will be encouraged to reduce their dependency on unskilled labourers.
While some large organisations have objected to the pay rise, with researchers at the CIMB Investment Bank Berhad saying it is likely to heighten production costs for plantation companies, the government says the changes will strengthen the Malaysian workforce and reduce the reliance on foreigners to provide human capital.
“We have strived to reduce the number of foreign workers and hope that the increase in minimum wage will see local workers taking on these jobs and not depend on foreigners,” said Liow Tiong Lai, president of the Malaysian Chinese Association.
Other areas of the budget outlined investment in training centres, and development areas for Malaysian workers. The government announced that 30 per cent of the Human Resources Development Fund would be dedicated to the implementation of training programmes to meet the needs of local industries in Sabah and Sarawak.
Money has also been allocated to universities and higher education, although students have protested against the reduced allocation of annual funds to universities.
The budget also included a RM100 million investment in the Digital Malaysia programme, in an effort to bring more SMEs online and create a digital economy in the region by 2020.
“The government has always been concerned about the welfare of the working class,” said Amarjeet Singh, a tax partner at EY Malaysia. “The country’s direction is to move the workforce up the value chain and increase their income levels. One of the thrusts in the 11th Malaysian Plan is to accelerate human capital development, so there is a focus on increasing labour productivity and the skills of workers.”