The Malaysian International Chamber of Commerce and Industry (MICCI) has cautioned that the increase in the minimum wage to RM2,000 from June 2027 could squeeze margins in labour-intensive industries, while calling for clearer tax rules and more predictable government approval processes under Budget 2027.
MICCI president Christina Tee said the wage increase, alongside an exemption for businesses with annual sales below RM50 million, could raise payroll costs for employers already facing elevated operating expenses.
She urged the Government to consider the cumulative cost pressures on businesses and provide sufficient lead time for employers to prepare for the changes.
On taxation, MICCI welcomed a proposed facility allowing manufacturers to reclaim sales tax on eligible machinery, spare parts and equipment bought from local traders or distributors, as well as specified raw materials used in producing pharmaceutical products, animal feed, fertilisers and pesticides.
However, Tee called for clearer eligibility criteria and consideration of extending the facility to a wider range of manufacturing inputs.
MICCI also welcomed the reintroduction of the Variation of Price clause to help construction contractors manage increases in diesel and bitumen prices, while stressing that its effectiveness would depend on implementation.
The chamber said efforts to reduce red tape through the STAR team and Government Service Efficiency Commitment Programme should be supported by clear service-level agreements, processing timelines and accountability to deliver tangible improvements.
On investment, MICCI noted the continued development of the Johor-Singapore Special Economic Zone and enhanced tax incentives for Global Services Hub activities from January 2027.
It also urged the Government to consult its E-Commerce Chapter, which comprises five leading Malaysian e-commerce players, during the development of the proposed E-Commerce Bill to ensure the framework supports fair competition while protecting sellers and consumers.
MICCI said Budget 2027’s impact would ultimately depend on effective implementation, predictable processes and manageable operating costs to sustain business confidence and investment.
