Timber conglomerate Ta Ann Holdings in Malaysia is expecting its labour cost to drastically increase once the national minimum wage policy is implemented. Source: The Star Online
Group managing director and CEO Datuk Wong Kuo Hea, speaking at the group’s annual general meeting (AGM) recently, said that to offset the higher cost it would be downsizing its labour force.
The group employs between 5000 and 6000 workers of which about 2000 are in its plywood division and another 3000 in the oil palm plantation.
“This minimum wage policy really has a big impact on industries in Sarawak, not only on Ta Ann. It has been documented without proper consultation with especially those in the timber and oil palm industries in the state.
“We have no choice but to cut production and reduce labour force,” Wong said.
Wong refused to reveal what percentage of the group’s work force would be laid off.
He lamented that the imposition of the policy came at the time when the economic crisis in Europe was affecting the timber industry.
Wong said Malaysia was also facing stiff competition in the timber processing industry from neighbouring countries like Indonesia where labour is cheap.
He said it was absurd that while neighbouring countries were cutting down on production costs, those in the timber processing industry in the country had to incur additional cost with the minimum wage.
“For a cubic metre of plywood production, we will now have to incur an addition of between US$20 and US$30.
“Under the poor economic condition, we simply can’t transfer the cost to our buyers as it will make our products uncompetitive.
“So the only logical thing to do is to cut production and lay off workers,” he added.