Posted on 01 Aug 2025
The Federation of Malaysian Manufacturing (FMM) has urged the government to allow flexibility in implementing wage reforms and to adopt a gradual approach in reducing the share of foreign labour under the 13th Malaysia Plan (13MP), even as it welcomed the overall blueprint as fiscally responsible and growth-oriented.
FMM president Tan Sri Soh Thian Lai said the proposal to align wages with skills, qualifications and job roles, including extending minimum wage coverage to skilled and TVET graduates, was timely in raising job quality and retaining talent.
However, FMM recommended that the wage-setting initiatives be positioned as guidelines rather than mandates.
FMM urges flexibility on wage reforms, gradual cut in foreign labour under 13MP
By Emir Zainul / theedgemalaysia.com
31 Jul 2025, 07:19 pm
FMM president Tan Sri Soh Thian Lai
KUALA LUMPUR (July 31): The Federation of Malaysian Manufacturing (FMM) has urged the government to allow flexibility in implementing wage reforms and to adopt a gradual approach in reducing the share of foreign labour under the 13th Malaysia Plan (13MP), even as it welcomed the overall blueprint as fiscally responsible and growth-oriented.
FMM president Tan Sri Soh Thian Lai said the proposal to align wages with skills, qualifications and job roles, including extending minimum wage coverage to skilled and TVET graduates, was timely in raising job quality and retaining talent.
However, FMM recommended that the wage-setting initiatives be positioned as guidelines rather than mandates.
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“Remuneration based on skills and qualifications will differ across industries due to variations in job complexity, market conditions, and productivity levels. Flexibility in implementation is essential to balance competitiveness with inclusivity and ensure broad-based participation in the workforce,” Soh said in a statement.
The 13MP, a five-year national development plan tabled by Prime Minister Datuk Seri Anwar Ibrahim in Parliament on Thursday, sets aside RM430 billion in development expenditure between 2026 and 2030, with a focus on resilience, productivity and industrial transformation.
On labour reforms, the federation welcomed the long-delayed multi-tier levy mechanism to encourage automation and local hiring, but raised concerns over the target to reduce foreign worker dependency from 15% to 10% by 2030.
Soh stressed that the transition must be gradual and with sector-specific considerations, noting that “many industries remain reliant on foreign labour due to the nature of operations and ongoing talent shortages.”
"The levy framework must also be complemented by incentive schemes and improved access to automation support, particularly for SMEs and labour-intensive sectors," he added.
Besides that, FMM also welcomed the 13MP’s emphasis on technical and vocational education and training (TVET), saying stronger industry linkages are vital to ensure that skills training matched market needs.
“FMM has long been an advocate of skills training and TVET. We look forward to working with the government in developing this link,” Soh said.
He added that reforms in this area would support the plan’s target of creating 700,000 new jobs in manufacturing and 500,000 in the digital economy, helping to counter the risk of de-industrialisation while embracing advanced technologies.
From a macroeconomic perspective, FMM described the RM430 billion allocation for development expenditure as striking the right balance between stimulating aggregate demand and maintaining debt sustainability under the Fiscal Responsibility Act.
Soh noted that the risk of crowding out private investment appeared limited, highlighting that early indicators from initiatives such as the Johor-Singapore Special Economic Zone and the electric vehicle sector suggested that public investment and policy clarity could instead draw in significant private capital.
Still, FMM warned that the plan’s ambitious industrial targets could be constrained by structural challenges, including skills mismatches, regulatory bottlenecks and underutilised capacity.
“Without timely implementation and coordinated sectoral support, the full benefits may not materialise. As such, we recommend aligning industrial development with incentives for technology adoption, SME participation and logistics optimisation,” Soh noted.
Source:The Edge
