RHB Research estimated that for every 10% rise in the minimum wage, planters’ earnings would be impacted by about 2% to 5%.
PETALING JAYA: The minimum wage in Malaysia could be raised to RM1,800 to RM2,000 per month in Budget 2025, up from RM1,500 currently.
The hike, however, will be detrimental to planters’ earnings, cautioned RHB Research.
The research house estimated that for every 10% rise in the minimum wage, planters’ earnings would be impacted by about 2% to 5%.
FGV Holdings Bhd
is an exception, given its lower earnings base.
On the bright side, RHB Research said plantation players may be exempted from the possible introduction of the multi-tier foreign worker levy in 2025.
The upcoming budget – to be tabled on Oct 18 – is expected to lay out more details on the levy.
The multi-tier levy proposal was initially announced in 2019 where it only allowed a foreign worker dependency ratio of up to 75%, with existing levies to be used as the first-tier charge.
The implementation, however, was postponed due to the Covid-19 pandemic.
“In recent times, we understand the threshold has been lowered to 70%.
“However, the plantation industry has lobbied hard to either be excluded entirely from this revision of levies, or be given a higher threshold.
“This argument is made on the basis that job scopes within this industry are difficult and laborious – and locals are not interested in these.
“As such, we believe there could be an exemption made for the plantation industry this time around, as most planters would be affected by the multi-tier levy if it is set at a 70% threshold,” stated the research house.
Based on its sensitivity analysis, RHB Research estimated that every 10% hike in the foreign worker levy would impact earnings for the planters under its coverage by about 1% to 2% per annum.
As for the construction sector, it said a 10% to 15% increase from each tier for foreign workers in the construction sector could increase labour costs by 1% to 4% per annum.
This is assuming labour costs comprise about 30% of overall costs and the levy is payable every three years upon renewal of existing workers’ contracts or the hiring of new workers.
“Nevertheless, the increasing adoption of industrialised building systems or IBS may mitigate such impact from the multi-tiered levy,” it added.
RHB Research also expects that the tax holiday exemption for completely-built-up electric vehicles (EVs) will not be extended beyond end-2025.
As for completely-knocked-down (CKD) EVs, the excise duty and sales tax exemption will remain in force until end-2027.
“With the recent debut of Proton’s first EV – the e.MAS 7 – along with Perodua’s own EV expected by end-2025, we believe the government will likely prioritise incentives to encourage the local assembly of CKD EVs.”
Meanwhile, RHB Research did not rule out the possibility of excise duty hikes for cigarettes and beer, with the last hikes taking place back in 2014 and 2016.
“On the other hand, Health Minister Datuk Seri Dzulkefly Ahmad recently revealed more plans to reduce sugar consumption – this could mean an excise rate hike for the products already attracting the sugar tax and widening of scope to cover more sugar-sweetened beverages or products,” it added.
Commenting on the high value goods tax that has been put on hold indefinitely, RHB Research said the luxury tax could be mentioned in Budget 2025.
“The market has yet to have visibility on how this proposed tax regime will be implemented – particularly the tax rate, types of items to be taxed and value threshold set. Such a tax could be negative for the industry.
“While ultra-high income earners may not be sensitive to such changes, their middle to high-income counterparts looking for entry-level cars may feel the impact.”
RHB Research also opined that dividend payout by Petroliam Nasional Bhd in 2025 may be lower than RM32bil due to a weaker set of results in 2024 amid lower oil prices.
“Meanwhile, the government is still examining the impact of the diesel subsidy rationalisation. We believe there is a possibility that the RON95 subsidy removal implementation may not be highlighted in the upcoming budget,” it said.
