Executive deputy chairman and managing director Mohd Bakke Salleh said the proposal, if implemented, would raise the labour cost’s contribution to total production cost to 35% from 26% currently.
“This translates into an additional cost of RM185 per tonne,” he told a media briefing on the company’s third-quarter financial performance here today.
He said Sime Darby Plantation and other players in the industry are currently working on an application to submit to the government to address the concern on minimum wage.
“(If implemented) I hope this (RM1,500 minimum wage) will not be made compulsory or it could have adverse financial consequences.”
Pakatan Harapan, in its 14th general election manifesto, had pledged to increase the minimum wage to RM1,500.
(The minimum monthly wage is currently set at RM1,000 for those in Peninsular Malaysia and RM920 for those in East Malaysia.)
Bakke said another area of concern for Sime Darby was the pledge to reduce the number of foreign workers.
He said plantations are a labour-intensive industry and foreign workers made up 70% of the total workforce in the industry.
Therefore, any disruption to the labour force would have a significant impact on the industry, he said.
“Even though Sime Darby Plantation has achieved 85% progress on automation, you can only do so much with mechanisation,” he added.
On other developments, Sime Darby Plantation is optimistic of ramping up its fresh fruit bunches production in Liberia to around 18-28 tonnes per hectare from 7.0 tonnes per hectare currently.
He said with good water management initiatives and sound agronomy practices, the company was confident of increasing production yield.
“Our palm trees now are quite young. When it achieves its prime period of between nine and 15 years of age, we will get the best out of them,” he said.
Meanwhile, on the company’s plans to sell its shareholding in New Britain Palm Oil Ltd (NBPOL), Bakke said the company was still keen to reduce its ownership in NBPOL to 60% from 100% currently.
However, he said the company was being selective about the potential buyer as it preferred a long-term partner.
Headquartered in Port Moresby, Papua New Guinea, NBPOL is a large-scale integrated, industrial producer of sustainable palm oil in Australasia with over 83,000ha of planted oil palm plantations, 10,000ha under preparation for oil palm, over 5,600ha of sugar cane, 9,000ha of grazing pasture and 12 oil mills.
Dr M: Increase salaries across the board, not just minimum wage