What’s minimum wage in Malaysia?

I REFER to the Minimum Wages Order which the Human Resources Minister made by notification in the Gazette on July 16.

Although the said Order comes into operation on Jan 1, it is frustrating and appalling that it does not define what components can constitute “wages” to make up the minimum wage of RM900 for Peninsula Malaysia and RM800 for Sabah, Sarawak and the Federal Territory of Labuan.

Throughout the Order, the term “wages” is used repeatedly without denoting clearly and explicitly whether the term refers to merely basic pay and/or includes fixed and regular allowances paid to employees e.g. shift allowances, attendance allowances, meal allowances, overtime meal allowances, laundry allowances, competency allowances, etc.

To add to the ambiguity, the illustration in Section 4 of the Order, introduces yet another undefined term “current basic wage”.

Is this meant to suggest that only basic wage can be part of the minimum wage?
While I understand that it is only an illustration, this does not help for purposes of clarity.
The National Wages Consultative Council Act 2011, under which the said Order was made, defines wages as having the same meaning assigned to it in section 2 of the Employment Act 1955.

The definition of wages under the Employment Act 1955 is “wages refer to basic wages and all other payments in cash payable to an employee for work done in respect of his contract of service.”

It excludes five types of payments which are mostly clearly defined. The definition of wages in the Employment Act 1955 is by no means a clear science.

Debate rages in the Labour Court even now, some 50 plus years after the Act was made law, as to what amounts to wages or not.

If one refers to paragraph three of the First Schedule of the Employment Act 1955, it states: “For the purposes of this Schedule wages means wages as defined in section 2 but shall not include any payment by way of commission, subsistence allowance and overtime payment”.

This means that under section 2 of the Employment Act 1955, commissions are part of wages. And since “wages” in the said Order refers to the definition of wages in section 2 of the Employment Act 1955, it follows that commissions are part of wages to make up the minimum wage.

Say if I hire a salesman and pay him a basic of RM500. In some months, when sales are good, he earns commissions in excess of RM400, and therefore his wages are more than RM900.

In other months, when sales are bad, his commissions are below RM400 and thus his wages are below RM900. It follows then that for the months where sales are good, I as an employer have not flouted the said Order whereas in the other months, I am in breach of the said Order.

Am I as an employer expected to watch the commission trend of each of my salesmen?

Imagine a car dealer who has 50 dealerships each hiring 20 salesmen. How am I to track this?

I do not underestimate the complexity of the issue of what components should or should not be part of wages.

I will be the first to agree that it is not an easy subject. However, if we are inclined to come up with a minimum wage with such uncertainty revolving around the word “wages”, surely the fixing of a minimum wage is to put the proverbial cart before the horse.

Let me remind the learned folks at the Human Resources Ministry and the Attorney-General’s Chambers that all these ambiguities are not doing any good to the employers or the employees; neither is it going to assist in its smooth implementation.

Unless a holistic and precise approach is made to the question of what constitutes “wages”, this very attempt to introduce a new regulation on minimum wages appears to be hurried through for political expediency and far removed from the concept of a high income society.\

FRUSTRATED HR PRACTITIONER
Kuala Lumpur

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Japan-China Territorial Dispute is Serious, and Escalating!

The Prime Minister’s residence in Tokyo has a “war room.”  During the a.m. hours of July 11 the room was bustling as government and Japanese

Self Defense Force officials studied intelligence and heard briefings on intrusions of three Chinese navy ships into waters around the Senkaku Islands (Diaoyutai Islands) claimed by Japan as its “exclusive economic zone”  (EEZ).

The three Chinese ships had entered Japan’s EEZ waters after 4 a.m. on the 11th.  They were met, followed, and ordered out of the EEZ by Japanese Self Defense Force ships.  They finally departed just after 8 a.m.

Later in the day, Japan’s deputy foreign minister summoned the Chinese ambassador to the Ministry of Foreign Affairs and delivered a formal protest over the Chinese “intrusion.”

At the time, Japan’s foreign minister, Gemba Koichiro, was in Phnom Penh attending the ASEAN foreign ministers’ summit.  That day, the 11th, Gemba met in a hotel with Chinese foreign minister Yang Jiechi.  The meeting was scheduled to take 30 minutes.  It continued for 50 minutes.

This could not have been a pleasant meeting.   Very likely, it was lacking in the normal diplomatic decorum.  Seemingly overnight, Japan-China relations have turned icy, bitter, and emotionally charged.

The Gemba-Yang meeting was the first since Prime Minister Noda announced on July 7 that it had become Japanese policy for the central government to purchase the uninhabited Senkaku islands–now privately owned by Japanese interests and administered by Okinawa prefecture–that are also claimed by China, which calls the chain “Diaoyutai.”

Gemba’s talking points with Yang were scripted by Noda who had told reporters on July 7:  “There can be no doubt that the Senkaku Islands are part of Japanese territory, both under international law and from a historical point of view.  The Senkakus are under the effective control of our nation, and there is no territorial issue with any country over the islands.”  (The Yomiuri Shimbun, July 8.)

How Yang responded we can only guess.  We can imagine that the two men talked—or shouted—past each other, uttering almost identical, conflicting positions.

The incursion of the three Chinese vessels was plainly a response to Noda’s announcement, and a signal from China that “nationalization” of the islands by Japan would be met by further escalation.

Tokyo mayor Ishihara Shintaro first touted in April the idea of purchasing the islands, now owned by a man from Saitama prefecture, by Tokyo municipality.  Since then he has continued to advance this idea, setting up a special team in the Tokyo government under his direct control, and raising donations from around the country that reportedly now total more than JPY 1.3 billion (USD 165 million)

Ishihara’s announcement drew a furious response from Beijing.  Also, a public comment from Japan’s ambassador to China, Niwa Uichiro, a former president of one of Japan’s largest general trading companies (sogoshosha), C. Itoh & Co.

“If Ishihara’s plan is implemented, it will produce a crisis in Sino-Japan relations. We cannot let it ruin everything we’ve done in past decades,” Niwa was quoted as saying by the Financial Times on June 7.

This statement raised hackles in nationalist circles and in both major Japanese political parties.  To hard-liners, such a statement displayed weakness and lack of resolve, and sent the wrong message to China.

PM Noda seems to have hoped to quell some of the controversy and unify Japan’s response by “centralizing” Ishihara’s initiative and making it a national government initiative.

The confrontation between Japan and China on the Senkaku/Diaoyutai issue has escalated to a truly dangerous level.  Objectively it must be stated that it has been Japan that has done the most to raise tensions.  Further escalation cannot be in the interests of either side.  While his leadership in domestic policy matters has generally been laudable, even brilliant, in relations with China on this issue he seems captive to interests that would lead Japan into a trap.

When Japan and China established diplomatic relations in 1972, Premier Zhou Enlai agreed that the issue of Daiyutai (Senkaku) could be put to one side until the time for resolution “was ripe.”  In 1978, when the two countries concluded an historic peace treaty, Deng Xiaoping said of the issue that it could be settled by “our children and grandchildren.”

Japan seems compelled to force the issue with China, while China would very likely be satisfied to live with the status quo, as long as Japan would acknowledge that it too has a claim on the islands and surrounding area.   Diplomatic negotiation of some kind of modus vivendi and mutual efforts at resource development and safe-guarding navigation would be possible on this basis.

Nothing so positive seems likely under current trends.  Quite the opposite.  Increasing, and increasingly dangerous, confrontation seems to lie ahead.

By Stephen Harner, Forbes Contributor

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HSBC exposed: Drug money banking, terror dealings, money laundering!

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HSBC hid '$16bn,' says a US senate
HSBC concealed more than $US16 billion in sensitive transactions to Iran, a US Senate panel says.
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The HSBC Private Bank in Geneva Source: AFP 

SHAMED HSBC Bank executives have admitted to allowing Iran, terrorists and drug dealers to launder billions of dollars.

With the international banking sector already under fire for manipulating interest rates and reckless trading, HSBC said more should have been done to prevent years of abuse amounting to tens of billions of dollars of illicit transactions.

US politicians grilled HSBC executives and US Treasury officials for failing to guard against money laundering they said benefited Mexican drug lords and terrorist networks, and for their bypassing of sanctions on Iran.

"It's pretty shocking stuff," subcommittee chairman Senator Carl Levin said.

Among the findings was the revelation that HSBC and its US affiliate concealed more than $15.67 billion in sensitive transactions to Iran, violating US transparency rules over a six-year period.

The chief compliance officer of HSBC says he is stepping down from that position after the investigation.

But David Bagley, the head of compliance for London-based HSBC Holdings, told a Senate investigations panel that he will remain at HSBC.

Bagley and other current and former executives of the bank apologised for lapses but said they weren't fully aware of illicit transactions flowing through the bank.

Senators expressed scepticism that they didn't know about problems that persisted for seven years.

"I recognise that there have been some significant areas of failure," David Bagley said at a hearing of the Senate Homeland Security Subcommittee on Investigations.

"HSBC has fallen short of our own expectations and the expectations of our regulators," he said.

While Bagley said the bank has "learned a number of valuable lessons" he acknowledged that this "clearly took far too long to resolve."

In its 330-page report, the Senate found the lender allowed affiliates in countries such as Mexico, Saudi Arabia and Bangladesh to move billions of dollars in suspect funds into the United States without adequate controls.

Bagley has been the head of compliance since 2002, during the period in which the Senate investigation found that HSBC's lack of oversight allowed the bank to be used by drug traffickers and possible financiers of terrorist groups, and for other illicit purposes around the globe.

Bagley said he lacked full authority over the bank's far-flung affiliates, which each had their own compliance officer.

HSBC executives were aware of the "concealed Iranian transactions" - which stripped all identifying Iranian information from documentation - as early as 2001 but allowed thousands of transactions to continue until 2007.

A review of HSBC's use of so-called U-turn transactions, in which funds are sent into and then out of the United States through non-Iranian foreign banks, showed the bank conducted almost $US25,000 transactions with Iran.

"The vast majority of the Iranian transactions, ranging from 75 to 90 per cent over the years, were sent through HBUS and other US dollar accounts without disclosing any connection to Iran," according to the report.

The US prohibits doing business with nations it regards as enemies such as Iran and North Korea, and its Office of Foreign Assets Control (OPAC) imposes tight filters to halt potentially prohibited transactions.

Levin said the bank willfully circumvented the OFAC filters.

The senator said senior HSBC officials in London "knew what was going on, but allowed the deceptive conduct to continue."

Under the slogan The World's Local Bank, the network that began life as the Hong Kong and Shanghai Banking Corporation provides US dollars to HSBC banks in many countries under a procedure known as "correspondent banking."

But its compliance failures clearly spun out of control.

The report said HSBC's Mexican affiliate "transported $7 billion in physical US dollars to HBUS from 2007 to 2008 ... raising red flags that the volume of dollars included proceeds from illegal drug sales in the United States."

And it said HBUS "provided US dollars and banking services to some banks in Saudi Arabia and Bangladesh despite links to terrorist financing."

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