Malaysia will raise its minimum monthly wage to 2,000 ringgit from June 2027, up from the current 1,700 ringgit, in a move expected to boost earnings for millions of workers, including foreign employees.

Prime Minister Anwar Ibrahim announced the increase while presenting the country’s 2027 budget to parliament on Friday. More than four million workers are expected to benefit from the new rate, he said.

Malaysia’s minimum wage rules also cover foreign workers. Employees from Nepal, Bangladesh, Indonesia and other countries are entitled to the same statutory minimum basic wage as Malaysian workers.

Malaysia introduced its minimum wage policy in 2013, setting the monthly rate at 900 ringgit. It rose to 1,000 ringgit in 2016, 1,100 in 2019, 1,200 in 2020, 1,500 in 2022 and 1,700 in 2025. The latest increase will bring the minimum wage to more than double its original level.

Anwar announced that micro, small and medium-sized enterprises with annual turnover below 50 million ringgit will be exempt from the new requirement. The exemption is intended to give smaller businesses time to adjust their business models.

“We need to narrow the gap between workers’ productivity and their wages. The cost-of-living burden has grown as incomes have failed to keep pace with rising prices,” he said while presenting the budget.

The government also plans to set a minimum starting monthly salary of 2,500 ringgit for semi-skilled workers and university graduates as part of wider efforts to improve the country’s wage structure.

“The minimum wage sets only a floor for workers’ earnings. Skilled workers are still not being paid in line with their qualifications and skills,” Anwar said.

The government also plans to tighten tax rules to curb the employment of undocumented foreign workers.

Under the proposed measure, companies other than micro, small and medium-sized enterprises will have to pay wages through bank accounts, using methods permitted under employment law, to qualify for tax deductions on wage costs, Anwar said.

Large numbers of Nepali workers are employed in Malaysia. The increase is expected to raise earnings for Nepalis and other foreign workers covered by the minimum wage rules. However, the June 2027 implementation date and the exemption for smaller businesses mean that not all workers will benefit immediately.