With the national minimum wage set to rise to RM1,700 from Feb 1, business owners are preparing to shoulder additional operating expenses, but at the same time, they are hoping for government measures to ease their financial burden.

Particularly affected are food court operators, coffee shop owners and vegetable farmers as they typically employ more foreign workers compared with other industries.

Malaysia-Singapore Coffee Shop Proprietors General Association president Wong Teu Hoon noted that large food courts employ more foreigners compared with traditional coffee shops, and so, they are impacted by the higher minimum wage of RM1,700 from RM1,500 previously.

“About 40% of coffee shops hire more than three foreign workers, while traditional coffee shops are mostly family-run,” he said.

Wong explained that coffee shop operators typically adjust the prices of beverage based on the operating costs.

“We encourage our members to absorb the higher costs where possible and avoid raising prices. If increases are unavoidable, the hikes should be reasonable,” he said.

Wong also said the steep rise in coffee bean prices since the middle of last year had further affected coffee preparation costs.

Wong expressed concerns about the government’s plan to require Employees Provident Fund (EPF) contributions for foreign workers.

“If this becomes compulsory, it will drive up the costs of doing business. We hope the government reconsiders and exempts foreign workers from EPF contributions,” he added.

Meanwhile, Federation of Vegetable Farmers Associations president Lim Ser Kwee said the rising minimum wage has also pushed up the salaries of local farm workers who are currently earning more than RM2,000 a month.

“When costs increase, we have no choice but to reflect this in vegetable prices,” he explained.

To address labour shortage, farmers have introduced a system whereby foreign workers would be paid based on their output.

“For instance, foreign workers growing cucumbers are paid according to the harvest. We provide the land, fertilisers and pesticides, which encourages them to work more efficiently,” he said, adding that the system also helped alleviate the problem of getting farm workers.

Lim highlighted that about 30,000 foreign workers are employed in vegetable farms nationwide.

However, the additional requirement to pay EPF contributions for the workers could significantly increase costs, potentially leading to higher vegetable prices.

Pan Malaysian Bus Operators Association president Datuk Mohamad Ashfar Ali highlighted that the government has capped ticket prices for economy buses since 2018 without any revision.

“This rate hasn’t been reviewed in years, despite our repeated appeals,” he said when contacted by The Star.

Mohamad Ashfar added that the increase in base salaries would have a ripple effect, including contributions to the EPF, the Social Security Organisation and the Employment Insurance System besides an increase in overtime payments.

He added that operating costs such as tyres, spare parts and buses have risen significantly over the years, although such factors were beyond the government’s control.

“To be fair, the government has allowed us a higher quota for subsidised diesel,” he added.

During the tabling of Budget 2025, the government proposed making EPF contributions mandatory for all foreign workers.

Asia News Network/The Star (Malaysia)