Malaysian furniture manufacturers say they have taken steps to minimize the impact of an increase in the minimum wage that takes effect this year.

The increase was set to take effect in January, but the government has extended the deadline until the end of this year, particularly if companies can show it is proving to be an undue hardship.

The increase would set minimum wages at just under $300 per month in Peninsula Malaysia and about $260 in the states of Sabah, Sarawak and Labuan in eastern Malaysia. This compares to a previous base wage rate below $200 a month paid by some producers, not including overtime.

Some manufacturers interviewed at the Malaysian International Furniture Fair in March said they are doing their best to minimize the impact on future pricing, making investments to achieve efficiencies in their plants. Others said they had already raised prices to help offset the increase.

At case goods producer Litako Enterprise, the new law will raise its base wages from $181 to $300 a month, a 65% increase, said Mandric Goh, marketing manager. To help offset this, Goh said, the company has raised prices on roughly 15% of the line. It has kept the rest of the line stable, partly through modifications on some pieces.

The company also has invested in energy-efficient equipment to reduce energy costs and materials waste.

Richard Lee, president of wood furniture manufacturer Oeko Furniture (pronounced eco), said the company instituted an average 8% price increase in January, but also has added value to its line by using plantation-grown solid acacia rather than rubberwood.

"It is more important that (buyers) look at the value of the furniture," Lee said, adding that to justify a price increase, one has to raise the perceived value.

Lee said the company also has taken steps to maximize its lumber yield, reducing cost associated with materials waste.

JK Lim, a marketing manager with bedroom and dining room producer Feng Yuan Inds., estimated that the company faces a 15% increase in production costs this year, some of which it has already started to pass along to customers. But like others, Feng Yuan is reducing the impact to its customers through plant efficiencies, automation and a lean operating model.

Some producers said they are holding the line on pricing during the year-long grace period on the wage hike, and are using the extra time to retrofit their plants and modify product lines.

"Overall economic conditions are not good, and that is why we are cautious about raising prices," said Albert Hsueh, who oversees research and development and marketing at wood furniture producer Green River Wood & Lumber.

In the meantime, he said, the company already raised its basic wage from about $200 to $300 per month in January. It is being more aggressive in its materials purchasing to help manage that added cost.

"We are trying to source more rubberwood in order to get better prices," said Hsueh, whose company employs about 1,500 in Malaysia. "If it works out, it should be able to offset some of the increased prices."

Others said they already are paying above the minimum wage. But more often than not, this includes overtime. Raising the basic weekly rate could cut into factories' ability to fund overtime, which could affect their ability to ship goods on time.

"If we have to pay $300 per month, we can't pay overtime, and then output is affected," said CS Yap, an executive with bedroom and dining room manufacturer Nova Talent. He said his company already pays more than $330 a month, which includes overtime.

"A lot of factories can't absorb any more changes," Yap said.

Dining room furniture producer Hin Lim Furniture raised its wages eight months ago by about 20% to 25%, said CEO Thomas Lim. He said the company raised prices 5% across the board to help cover the cost.

"We don't go for high volume, low-priced items," Lim said. "We sell value added, so labor is not a big deal."