Power hike is triple whammy, say employers

  • Nation
  • Sunday, 29 Dec 2013

PETALING JAYA: The Malaysian Employers Federation is appealing to the Government to defer the implementation of the electricity tariff increase.

MEF executive director Sham-suddin Bardan said the timing of the hike would adversely affect big and small businesses as employers are already facing higher operational costs with the minimum wage ruling effective next month and the retirement age extension to 60, which was implemented last July.

“These increases in the cost of doing business are on top of the additional 1% rise in EPF employer contributions for employees which came into effect last year.

“The bottom line of employers whose financial year is from April this year to March 2014 will also be negatively impacted because they did not budget for the extra electricity costs from January to March next year.

“The 2013 financial year profit and loss would be affected as the employer is not able to pass on the increase in electricity costs to consumers with prices of products already agreed on,” he said, adding that electricity accounts for 6% to 15% of small and medium enterprise business costs.

With the rise in electricity tariff, SME profits are expected to drop.

A chain reaction in overall price increases could result from the tariff hike, he warned.

MEF is asking for rebates to be offered to companies affected by the hike and for the current off-peak tariff rates to be reduced so that businesses can adjust their operation hours.

Shamsuddin said some employers may implement more shutdown days to reduce electricity consumption.

“Efficient supply of electricity is a must, especially if the tariff goes up,” he said, adding that there were previously many unscheduled electricity disruptions resulting in production and material loss and equipment repair.

He also urged relevant authorities to advise and guide employers and the public on the optimal use of electrical equipment to better manage rising electricity cost.

Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili recently announced a review of electricity and gas subsidies, with the average electricity tariff to be raised by 4.99 sen per kWh in Peninsular Malaysia and 5 sen per kWh in Sabah.

Both rates will come into force Jan 1.

Related stories:
Businesses to set thermostats higher to cope with electricity tariff hike
Cut costs but keep us safe, say customers

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