BN'S DOMINO EFFECT: Serious price hikes on the way - first ELECTRICITY, next GST

Following the hike of petrol and diesel prices recently, white sugar subsidies have been removed and the 6% GST to be implemented from 2015. Besides, electricity tariff will also be increased by 5% to 10% from early next year although the actual margin is yet to be decided by the Cabinet.

Before we can even become a high income country, we have to first bear the brunt of skyrocketing prices.

The government has tried to trim government expenditure and shrink our budgetary deficits by way of progressively abolishing subsidies. The government spends up to RM12 billion in fuel subsidies every year, and is now pinning its hopes on reduced fiscal burden through increased electricity tariff.

As a matter of fact, ever since fuel prices were raised in October, rumors have it that electricity tariff would soon follow suit and the margin could be as high as 14.9%, twice as much as the average 7.12% during the last hike in June 2011.

Although the margin has yet to be approved by the Cabinet, it appears certain that electricity tariff is well on its way up. However, given the fact that Malaysia is a producer of natural gas and petroleum, 10-20% of electricity hike within a short span of two years has indeed aroused controversies.

Ordinary people will have to brace for a domino effect of price rises

Sure enough Tenaga Nasional needs the additional revenue to sustain its operations, the government must also take into consideration the chain effects that come with drastic increase in electricity tariff. All buildings need to consume electricity, be it residential houses, schools, factories or small businesses.

Even as the government assures the public that the hike will not increase the burden of low-income families, as households using less than RM20 of electricity a month will continue to be exempted or minimally adjusted, the problem is this hike will directly increase the operation cost of businesses across all sectors, in particular the heavy users such as heavy industries, construction material manufacturers and other manufacturers. Prices of related products will shoot up accordingly and such costs will eventually be transferred to the consumers.

It is foreseeable that ordinary people will have to brace yet another round of mounting inflationary pressure, adding to their financial burden.

After that GST - another round of rises to come!

Other than increased electricity cost, Malaysians will also have to prepare for the impact from the imminent 6% GST implementation, especially the middle and lower-income groups. With the people's living standards declining, how can we move ahead towards the goals of a developed nation?

Before approving the margin of electricity tariff hike, the Cabinet should first consider the widespread influences from it while contemplating other means to diversify the power load such as wind and solar power resources.

On top of that, the government must also review the operational efficiency of TNB as well as its agreements with independent power producers (IPPs). There are unfair terms in the power purchase agreements signed with the IPPs which translates into unfavorable electricity tariffs. - mysinchew