Minimum wage hike expected to drive up F&B prices, warns industry leader

KUCHING (Oct 20): The prices of food and beverages are expected to rise by at least 10 per cent next year after the implementation of the new minimum wage rate of RM1,700, said Kapitan Tan Yit Sheng.

The Kuching Coffeeshop and Restaurant Owners’ Association education chief noted that many industries, including coffeeshop and restaurant operators, will face challenges as the minimum wage increases from the current RM1,500 to RM1,700 next year.

“We will be left with little choice but to increase the food and beverages prices when the minimum wage rate increases next year. The rate of increase will vary among individual coffeeshop operators.

“When the new minimum wage rate takes effect, a price hike will be an unavoidable trend,” Tan told The Borneo Post when asked to comment on the the new minimum wage rate and a gradual increase in the excise duty on sugary drinks that were announced in Budget 2025.

Tan warned that increasing the minimum wage could create a ‘doom loop’, with a 15 per cent increase in the salary of RM1,500 failing to match an eight per cent increase in the prices of vehicles and houses.

“An increase of RM200 in salary won’t help much, especially considering the prices of vehicles and houses. For example, an eight per cent increase on a car priced at RM40,000 is RM3,200, and house prices could go up to RM800,000 for an intermediate double-storey terrace house.

“Therefore, increasing the minimum wage is not the solution. The government should implement other policies to help people cope with rising living costs.”

On the increase in the excise duty on sugary drinks, Tan noted that similar policy had been implemented previously and manufacturers had already taken steps to address it.

“When the sugar tax was first introduced and implemented before this, manufacturers had already reduced the use of sugar in line with the government’s aim to promote a healthy lifestyle among the community.”

He suggested that the government should focus on educational campaigns to encourage the people to reduce the intake of sugar, as “education would fare better than imposing a sugar tax”.

Tan also recommended that the revenue from the sugar tax to be used to upgrade or build more sport-related facilities to encourage regular exercise.

“The government should conduct more educational programmes to guide our people on how to lead healthy lives and maintain a healthy diet.”

In the Budget 2025, the government decided to raise the minimum wage from RM1,500 to RM1,700 starting Feb 1 next year, along with a gradual increase in excise duty for sugar-sweetened beverages from Jan 1 next year.