KUALA LUMPUR, July 29 (Bernama) -- Bursa Malaysia rebounded to close higher on Wednesday on selective buying of defensive stocks after a volatile trading session. IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan said consumer products and services stocks lifted the key index higher, overcoming lingering geopolitical concerns. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 3.08 points to 1,715.56 from yesterday’s close of 1,712.48. The benchmark index, which opened 1.91 points higher at 1,714.39, moved between 1,710.79 and 1,720.59 during the day’s trading. In the broader market, gainers outstripped decliners 550 to 476, while 612 counters were unchanged, 1,129 untraded, and 48 suspended. Turnover rose to 2.96 billion units valued at RM2.48 billion from 2.94 billion units valued at RM2.56 billion on Tuesday.
A proposed increase in Malaysia's minimum wage is expected to raise operating costs for the country's plantation sector and encourage a shift toward automation, according to Public Investment Bank.
The Ministry of Human Resources plans to propose raising the monthly minimum wage from RM1,500 to RM1,700, as reported by Nanyang Siang Pau citing unidentified sources. If implemented, the operating costs for plantation companies could rise by up to 3%, the bank estimates.
Impact on Labour-Intensive Industry
A higher minimum wage will likely push the labour-intensive plantation sector to allocate more capital for the automation of work processes to reduce headcount, including investments in robotic arms, drones, and other specialized machinery. This shift could also help reduce the industry’s heavy reliance on foreign workers, especially since the new hiring quota remains frozen.
The government is set to review the minimum wage this year, as required by law, which mandates a review at least once every two years. The last review, implemented in May 2022, set the minimum wage at RM1,500 for all sectors nationwide for employers with five or more workers.
Dependency on Foreign Labour and Wage Effects
Malaysia has long depended on cheap foreign labour for its plantation estates, many of which are located on uneven or hilly terrains. Channel checks by Public Investment Bank revealed that general workers such as security personnel, admin clerks, carpenters, drivers, and mechanics—those who fall under the current RM1,500 wage bracket—typically make up about 15% to 20% of the total workforce.
The bank noted that raising the minimum wage could also have a cascading effect on higher wage brackets. However, the impact could be mitigated if the wage increase leads to higher productivity.
Shift Toward Performance-Based Pay
Some companies are gradually moving general workers from hourly wages to performance-based pay, which could help align productivity with higher pay levels. This strategy is aimed at driving overall group productivity, the bank said.
Currently, Public Investment Bank maintains a 'neutral' rating on the sector, indicating a balanced outlook in light of the potential cost increases and productivity gains.
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