Electricity tariffs, labour costs hike to much for car parts businesses

 

Automotive component makers are calling on the government to defer the implementation of the “sudden upward revision” of the electricity tariff surcharge by more than 566 percent to between 20 sen and 27.7sen/kWh beginning Jan 1, 2023, from 3 sen/kWh currently.

Perodua Suppliers’ Association (P2SA) president Helmi Sheikh Mahmood said the increase “will have a profound impact on every industry, regardless of size as the net result will be shared by all.”

Helmi was speaking, in a joint statement, on behalf of the Proton Vendors’ Association (PVA); Toyota Suppliers’ Club (TSC), Honda Malaysia Suppliers’ Club (HMSC), and the Malaysian Automotive Component Parts Manufacturers’ Association (MACPMA).

He said that the group of automotive component manufacturers understands the government’s intentions to remove subsidies away from the medium voltage (MV) and high voltage (HV) industrial users as a way to mitigate the impact of high coal costs on the energy sector.

“That being said, the soon-to-be-implemented tariff, coupled with the recently revised Employment Act 1955 (Amended 2022), will be too heavy for us to bear,” Helmi said in the joint statement.

He stated that the amended Act, which saw an increase in the minimum wage level by 25 percent to RM1,500 from RM1,200, coupled with the reduction of weekly work hours from 48 hours to 45 hours as well as increasing the threshold of those who are entitled to overtime compensation, have already increased overhead costs considerably.

“These two factors (tariff hike and the revised Employment Act 1955) would be too heavy for us to absorb and as a result, the industry will have to pass these costs on to customers.

“This would have a devastating impact on the automotive industry as this would result in a massive increase in vehicle prices,” Helmi said.

“We too wish to serve Malaysia and we kindly ask the government to delay the increase in power tariff and work with us to insure any changes, with regard to policies, laws, taxes, incentives, tariffs or other initiatives would have the desired effect,” he added.

- Bernama