PETALING JAYA: The Federation of Malaysian Manufacturers (FMM) strongly opposes the increase in the base electricity tariff for 2025-2027, its president, Tan Sri Soh Thian Lai, said.
The 14.5% increase will have a big impact on industries especially when the manufacturing sector is facing its toughest time with escalating costs and uncertainties.
“Not only will there be an impending increase in operational costs expected in 2025, such as the higher minimum wage and other compliance costs imposed by evolving regulatory requirements, the sector is also bracing for global uncertainties such as geopolitical tensions, persistent supply chain vulnerabilities and shifting trade policies including potential new or higher tariffs enforced by the US administration,“ Soh said in a statement.
Last week, Tenaga Nasional Bhd announced a new tariff schedule with a base tariff of 45.62 sen per kilowatt-hour for Peninsular Malaysia under Regulatory Period 4 (RP4), which will be implemented starting July 1, 2025. The base tariff under RP3 was set at 39.95 sen/kWh between 2022 and 2024.
“The current electricity tariff schedule, which has been in place since 2014, will continue to be in effect, with no change in the electricity tariff rate and tariff structure until June 30, 2025,” TNB said in a filing with Bursa Malaysia on Thursday, Bernama reported.
The following day, Prime Minister Datuk Seri Anwar Ibrahim said the government would not allow an increase in electricity tariffs that could adversely affect the majority of Malaysians. He said that although tariffs need to rise, this should not affect a significant portion of the population.
“We do not allow electricity tariff increases that affect the general public. Any increase, as before, will only involve the upper-income group ... what I refer to as the ultra-rich or profit-making industries,“ Anwar was quoted saying.
Soh said that it is imperative to note that in the last few years, the industrial sector has seen several significant
operational cost increases.
These include the natural gas price increase to above RM40/mmBtu since the third quarter of 2022, the increase in water tariff for the non-domestic sector from August 2022 to January 2023, with tariff review every 3 years, including electricity charge, which is reviewed annually.
Further, since January 2023, there have been double-digit Imbalance Cost Pass-Through surcharges for medium and high-voltage users, which have impacted domestic industries.
Soh said local industries are seeing the continued impact of amendments to the Employment Act, which came into effect on Jan 1, 2023, that expands the scope to overtime entitlement for those earning up to RM4,000, increase in maternity leave to 98 days, reduction in weekly working hours to 45 hours from 48 hours previously, among others.
And in 2024, Soh said, domestic businesses faced significant cost increases, including a 300%-400% rise in Department of Occupational Safety and Health inspection fees (e.g., RM3,435 to RM14,750), an 8%-12% hike in logistics costs due to a 6% service tax increase, additional expenses for e-invoicing IT systems, and higher penalties under the Environmental Quality Act and Occupational Safety and Health Act.
Further cost pressures are anticipated in 2025, with the minimum wage rising to RM1,700 on Feb 1, adding RM10.8 billion to annual payrolls. The implementation of a multitier levy system and mandatory Employee Provident Fund contributions for non-citizen employees are estimated to increase payroll costs by RM6.6 billion annually.
“With the overall significant cost increases highlighted above, FMM reiterates its call for the government to keep the industrial tariff rates unchanged so that Malaysia continues to be competitive as well as attractive to foreign investors.
“The government also needs to hold an immediate dialogue with stakeholders on this matter,“ Soh said.
