KUALA LUMPUR: Chinese businessmen are urging Putrajaya to redefine “minimum wage” to include allowances and transport allowances in the new salary scheme, as the small and medium enterprises (SMEs) are feeling the heat of escalating costs since the implementation of the minimum wage last year.

Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) president Datuk Lim Kok Cheong said SMEs have suffered badly since its implementation despite the government’s decision to defer the payment of the minimum wage to foreign workers.

“As such, we had submitted a memorandum to the National Wages Consultative Council (NWCC) for review and consideration in May,” Lim told a press conference yesterday.

He said the government should encourage businesses to practise a productivity-linked wage system.

According to a survey conducted by ACCCIM, the three most affected industrial sectors are agriculture, timber, fishery, farming and gardening (93%), food and beverage  (89%), and manufacturing (84%). The new wage scheme has had less impact on the ICT sector and professionals.

However, a survey found that as many as 39% of the respondents did not take any measures to mitigate the impact of the minimum wage. Some 18% of respondents chose automation to offset the hike in operating costs while 16% adopted productivity-linked wage systems to curb rising costs.

The Report of 2014 SME Survey took place between June 28 and July 30. A total of 2,000 questionaires were distributed and there were 541 respondents.

The minimum wage was implemented last year — for Peninsular Malaysia it was set at RM900 per month and for Labuan, Sarawak and Sabah RM800.

On the goods and services tax (GST) that is scheduled to take effect from April 1 next year, Lim hopes the government will keep the 6% tax rate for a period of at least three to five years.

“We hope the government will grant a two-year grace period of learning and settling down of implementation of GST,” he said, adding that no legal action nor penalties should be taken against businesses that unintentionally make mistakes during the grace period.

ACCCIM national council member Koong Lin Loong said about a third of SMEs surveyed are still unclear about various terms of the GST.

“He said only 61% of respondents understood the term “input tax” and 62% knew what “output tax” meant and only half of the respondents understood other GST-related terms such as “standard-rated supply”, “zero-rated supply” and “exempt supply”.

“Overall, the SME operators are still in the dark about the new tax regime,” he said.

According to Koong, most of the respondents from the food and beverage sector were ignorant of the GST, did not understand the various basic terms and what they need to do, including training their employees on the use of the software required for the implementation of the tax.

“This is a worrying sign,” he said.

This article first appeared in The Edge Financial Daily, on November 18, 2014.