PETALING JAYA: The Malaysian Plastics Manufacturers Association (MPMA) is disappointed with the government’s decision to maintain the Imbalance Cost Pass Through (ICPT) surcharge for first-half 2024 (H1’24) at 17 sen/kWh for medium- and high-voltage industrial users.
MPMA president CC Cheah said, “The cost of fuel to generate electricity in 1H of 2023 has been significantly lower compared to 1H 2023. For example, coal futures price has declined by 32% from the average of US$206.6/MT in 1H 2023 to US$141.1/MT in 2H 2023. As a result, the subsidy allocation for 1H 2024 has reduced significantly to RM1.9bn as compared to RM5.2bn for 2H 2023.”
“With the substantial savings in subsidy allocation, such savings should have been passed on partially to the industrial users through a reduction in ICPT surcharge,” he said, adding that the plastics industry is facing challenges due to the current global economic slowdown.
He said a reduction in electricity cost would assist plastics manufacturers to stay through this difficult period and remain competitive in the export market.
Electricity cost forms a large portion of the plastics manufacturing costs, ranging from 5% to 20%, depending on the type of production processes. The 17 sen/kWh electricity surcharge or about 40% increase in electricity tariff will translate into a net increase of between 2% and 8% in the plastics manufacturing cost since last year.
“We would like to appeal to the government for greater transparency in implementing the ICPT so that it will not benefit only a small group and leave the majority of the industrial users to bear the cost burden,” said Cheah.
There are currently about 1,200 plastics manufacturing companies in Malaysia, employing about 150,000 workers. About 90% of the companies are small and medium enterprises, based on the 2014 SME Definition. The plastics industry registered total sales turnover of RM62.7 billion in 2022, of which 27% or RM16 billion worth of production was exported.
