MSIA appeals for further review of electricity tariff surcharge increase

KUALA LUMPUR: The Malaysia Semiconductor Industry Association (MSIA) is appealing to the government for more gradual and tenable electricity tariff surcharge rates to ease the cost burden on electrical and electronics (E&E) companies.

This was in reponse to an announcement by Natural Resources, Environment and Climate Change Minister Nik Nazmi Nik Ahmad last week that there will be an electricity tariff adjustment on the imbalance cost pass-through (ICPT) from 3.7 sen to 20 sen for medium voltage and high voltage users among industry participants, including multinational companies.

"These companies will expect to see an increase of 50% on their electricity bills from Jan 1, 2023," said MSIA in a statement.

It added that a further cost increase would jeapordise the competitiveness and attractiveness of Malaysia as a preferred location for semiconductors and electronics.

MSIA president Datuk Seri Wong Siew Hai said the government should undertake a thorough analysis on a sectoral level including comparative benchmarking with other countries as well as consultation with industry before any decision is made.

"This postponement will help medium and large sized local companies and MNCs that are equally affected by the current economic situation as it has been widely reported that 2023 will be another challenging year globally and for Malaysia as well," he added.

Wong said that among the many challenges this year, that there has been higher electricity cost for the year, an increase in raw material prices, a shortage of workers, Covid-19 SOP implementation costs and higher logistics costs.

He added that MSIA has also appealed to defer for further review a 25% increase in minimum pay and an increase in the overtime threshold to RM4,000 from Jan 1, 2023

According to the association, the E&E industry has already been impacted by demand correction due to the US export sanction to China, high inflation and impending global recession.

It said global technology companies have recently announced massive layoffs and job-cuts in anticipation of the global slowdown in E&E demand.