Electricity tariff hike will burden big businesses, deter foreign investments, says MEF

PETALING JAYA: Putrajaya’s new electricity tariff hike could pose a burden to big businesses and could reduce potential foreign direct investment in the country, says Datuk Dr Syed Hussain Syed Husman.

The Malaysian Employers Federation (MEF) president said that this year alone, employers were already burdened by additional operating costs due to the implementation of the new RM1,500 minimum wage and the increase of Socso contributions from RM4,000 to RM5,000.

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“All employers - big or small - are trying their best to recover from the negative impacts of Covid-19 and the big floods. Many of them still faced cash flow problems.

“Next year, employers will be faced with many uncertainties with a forecasted recession in the global economy,” said Syed Hussain.

According to him, the proposed electricity tariff hike will be seen as discouraging multinational companies and large export oriented companies from remaining in Malaysia.

“New investors may not be attracted to invest in Malaysia.

“Thus, it is critical for the government to come up with innovative incentives to retain and attract multinational and large export oriented companies to remain and at the same time, attract new investors in Malaysia,” said Syed Hussain.

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Syed Hussain proposed the implementation of a gradual reduction of subsidies on electricity, rather than a hike on tariffs.

“We hope the government will discuss with the MEF and other stakeholders before rolling out the decision on electricity tariff for multinational and large export oriented companies,” added Syed Hussain.

Syed Hussain also said the existing subsidies of 8.11 sen for non-domestic users for every kilowatt-hour (kWh) of electricity consumption in Peninsular Malaysia in the second half of this year, should be maintained.

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“Of the RM5.8bil to fund electricity surcharge subsidy, RM2.3bil goes to cover the domestic user portion.

“The government allocated RM3.5bil to subsidise all non-domestic consumers such as commercial and industrial undertakings,” said Syed Hussain.

In a press conference after chairing a cabinet meeting on Wednesday (Dec 14), Prime Minister Datuk Seri Anwar Ibrahim said that only multinational and large export-oriented companies will be subjected to an electricity tariff hike.

The announcement by Anwar came after the government decided not to increase tariffs for households and SMEs, which will result in a RM30bil crunch to the government’s coffers.