Risky to levy windfall tax on IPPs


  • Letters
  • Tuesday, 29 Jul 2008

WHILE the latest announcement on the Windfall Tax and PPA renegotiations may benefit TNB, it has raised the regulatory risk and country risk rating of doing business in Malaysia.

This will translate to higher costs of raising capital, and a downward trend in credit appetite for big projects in the country.

If the windfall tax is implemented, the country’s risk rating will escalate and investors will pack their bags to leave Malaysia.

The IPPs are indigenous companies that have taken a bold step (not to mention a huge risk) to invest in the high-risk power generation sector.

The IPPs also diligently pay corporate tax in the millions every month and contribute to a special industry fund that supports rural electrification and other industry development initiatives.

It is interesting to know if the PPA renegotiation will actually translate to lower electricity tariffs, because this will have a far reaching impact on the economy and the rakyat.

We know for a fact that a major bondholder is EPF. The question then will be, are we going to get lower dividend payments next year?

How about the IPPs themselves? If the windfall tax is implemented for all IPPs, without exception, they will suffer huge losses.

The first thing that will happen is that some employees may be retrenched.

Worse still, if the losses continue, IPPs will definitely close shop. Who will be responsible for the loss of employment of thousands of locals employed by the IPPs?

I am concerned about my and my colleagues’ jobs.

The question that has been leaving us with sleepless nights is: does anyone care about us Malaysians who are employed in the IPPs?

EKSID S.M.K.,

Kuala Lumpur.

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