Group calls for staggered removal of electricity subsidies for businesses

 

The government had said RM8.74 billion would be allocated to subsidise tariffs for low voltage non-domestic users.

PETALING JAYA: A business group has urged the government to remove the subsidy on electricity tariffs for businesses gradually over the next five to 10 years to prevent any drastic effects.

The Malaysian International Chamber of Commerce and Industry (MICCI) said removing the subsidies too quickly would deter foreign direct investment (FDI) and affect those who had already invested here.

MICCI president Christina Tee said the lower cost of electricity and fuel was one of the major attractions for FDIs and domestic direct investments in Malaysia.

While backing Putrajaya’s efforts to help the needy, Tee said businesses were the backbone of the economy and provided for the livelihoods of lower to middle-income families.

“A policy change in these cost drivers mid-stream or after they have made significant investments does not bode well for existing investors, nor is it attractive for incoming FDIs.

“The changes in electricity tariffs as an additional cost burden in the immediate years will severely impact the industry,” she said in a statement.

The government is implementing targeted electricity subsidies from Jan 1.

The government had said RM8.74 billion would be allocated to subsidise tariffs for low voltage non-domestic users, namely micro businesses and small and medium-sized enterprises.

However, medium voltage and high voltage users among industry participants, including multinational corporations, will face a surcharge of 20 sen/kWj, but still less than the full 27 sen/kWj.

Natural resources, environment and climate change minister Nik Nazmi Nik Ahmad said Putrajaya would be spending RM1.93 billion to partly subsidise the surcharge.

Tee warned that additional power costs would “severely” impact the industry as companies were still recovering after the pandemic and becoming more environmental, social and governance compliant.

“Perhaps the subsidies removed can be offset by the expense incurred by installing or purchasing alternative green energy which, in the long run, is a win-win outcome for both the government and industry.

“With the adoption of alternative energy, the cost effect of the total removal of the subsidy will be negated,” she said.

She also urged Putrajaya to hold more in-depth and closer engagements with chambers of commerce in the country on the rate and timing of this subsidy removal. - FMT