Highlights

• The new monthly minimum wage rate is due to be announced in Budget 2027 on 9 October, with the Cabinet having agreed on 30 September to exempt MSMEs for now. Figures of RM2,000-2,200 have been circulating as possible new minimum wage rates.
   
• At a RM2,000 minimum wage, a 17.6% rise, we estimate a pre-tax cost of RM26m-87m a year per listed planter, or about RM110 per tonne of crude palm oil (CPO). After tax, that is 2.6% of last year’s net profit for SD Guthrie and 18.5% for Hap Seng Plantations.
   
• The exemption keeps smaller estates and smallholder suppliers at the RM1,700 minimum wage rate, shifting the cost onto listed estates. RM2,000 remains below a RM2,235 living wage estimated for plantation workers, but narrows the gap before the EU Forced Labour Regulation comes into effect.

Analysis

• The minimum wage decision lands on 9 October. Human Resources Minister R. Ramanan said on 29 September that his Cabinet paper on the minimum wage had been submitted but no rate had been agreed. The statutory review under the National Wages Consultative Council (NWCC) Act will be due in Feb 27, two years after the rise to RM1,700.
   
• What a RM2,000 minimum wage will cost listed estates. We apply the RM300 monthly increase to every worker in each company's Malaysian workforce, plus the 6.8% in employer contributions to the Employees Provident Fund (EPF), Social Security Organisation (SOCSO) and Employment Insurance System (EIS), resulting in a total cost of RM3,843 per worker a year (please refer to table overleaf). Across the 439,594 workers in Malaysia's estate sector, this works out to about RM1.7b a year of additional labour costs before the MSME carve-out. We assume full pass-through, as planters recalibrate piece and daily rates. As a cross-check, Sime Darby Plantation estimated in 2018 that a RM500 increase would add RM185 per tonne of CPO; if this is pro-rated to RM300, it would amount to RM111/tonne, which is in line with our estimate of about RM110/tonne.