Dire domino effect on businesses from tariff hike

PETALING JAYA: The hike in electricity tariff for commercial users since January has led to rising hotel room prices and is squeezing margins for other businesses that are unable to pass the cost on to their customers, say business groups.

Malaysian Association of Themepark & Family Attractions (Matfa) president Tan Sri Richard Koh said three months after the tariff hike, the prospect for theme parks, amusement parks and other attractions is not so good.

“Amusement parks rely on local visitors, so we cannot simply increase ticket prices, and it is sad that one water park plans to close down,” he said.

When contacted, Ehsan Waterpark Sdn Bhd general manager Abdul Gafur Suleiman said the water park had to close due to high operation expenses from utilities, which cost nearly RM500,000 per month now.

He said the water park’s revenue was not sufficient to cover the increase in operational costs.

“We have 30 local employees – and we have to lay off almost 50% of our staff.

“With our utility fees increasing by 60%, we had cut down staff over time,” said Abdul Gafur, adding that the water park caters mainly to the B40 group, with tickets priced at no higher than RM30.

“We tried hard to sustain ourselves for over a year, but at the end of February, we decided to close the business,” said the general manager of the park located at Port Dickson, Negri Sembilan.

Legoland Malaysia divisional director Lim Choong Sean said any decision to increase ticket prices will depend on a host of factors apart from high electricity tariffs, with staff costs also playing a crucial role.

He said the implementation of a new rule requiring working hours be reduced from 48 to 45 hours a week also increased operating costs for amusement parks, which are dependent on school breaks and other holidays for business.

Malaysian Association of Hotels (MAH) Johor chapter chairman Ivan Teo said hotels, especially five-star ones, had to raise rates to cope as they have more facilities like pools, gyms and lounges that must be kept cool for lengthy periods.

“Four-star hotels have more limited facilities, so the adjustment won’t be too high,” he said, adding that hotels have adjusted room prices upwards by 20% to 40% for various reasons, including for increased employee incentives.

MAH president Datin Christina Toh said the association is monitoring room rates, with different states charging hotel rooms at varying rates, and with adjustments based mostly on higher operating costs.

Malaysian Budget and Business Hotel Association (MyBHA) president Dr Sri Ganesh Michiel said low-cost hoteliers would have to raise their prices by at least 50% to survive.

“We have not raised the rates since the electricity tariff hike in January for fear of an adverse reaction from the people,” he said, adding that budget hotels provide an important option.

He gave the example of many families staying in budget hotels following the Johor floods, causing them to operate at full capacity.

“We call on the government to aid the hotel business instead of adding to the burden of the industry during difficult times.

“If the government wants to help low-income groups, it could support hoteliers in controlling Airbnb, which subsists on residential utility rates and threatens the survival of local hoteliers,” he added.

In announcing the tariff hike last December, Natural Resources, Environment and Climate Change Minister Nik Nazmi Nik Ahmad said the government would have to bear RM14.91bil to maintain the electricity tariff without targeted subsidies.

With the new tariff structure, he said RM4.16bil – which would have been used to bear the cost of electricity subsidy – could now be allocated to help the rakyat through other means.

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