The Prime Minister of Malaysia, Sri Ismail Sabri Yaakob, last month announced that the national minimum wage will be increased to 1,500 ringgit (RM) or $344 per month from May 1.
This could have a significant impact on the country’s local investments as a steep 35% minimum wage hike could push out investors to the neighbouring countries in the region.
Bangladesh, Indonesia and India could become lucrative grounds for investments as the minimum wages in these counties are significantly lower than that of Malaysia.
According to ILO, Bangladesh has the lowest minimum wage in the Asia Pacific region with only $48 per month, in comparison to Malaysia’s revised minimum wage of $344.5.
Neighboring India has the region's second-lowest minimum wage of $215 and Pakistan on the other hand topped the South Asian ranking with a monthly minimum payment of $491.
Bangladesh is placed fifth from the bottom out of 136 countries in the world.
Many experts claim that there could be a clear political motive behind the Malaysian government’s decision to raise the minimum wage ahead of the general elections, which are scheduled to take place later this year. However, this could mean good news to the large number of Bangladeshi workers currently working in Malaysia as this would mean more remittance and a higher Forex reserve for Bangladesh.
Bangladesh’s competitive wages, exchange rates, strategic location and a large young workforce make the country a suitable place for foreign investments.
Bangladesh sent a total of 1.06 million workers to Malaysia during the period of 1976 to 2021.
The country exported 175,927 workers in 2018, but only 545 workers, 125 workers and 24 workers in 2019, 2020 and 2021 respectively.
The country exported only a total of 34 workers during the January-March period of this year.
Malaysia suspended hiring Bangladeshi workers in September 2018 over allegations of malpractice in the recruitment process but officially reopened its labour market in 2021 to Bangladeshi workers for five years until December 2026.
