Biz may not charge excessive price on electricity tariff hike

Public is reminded to stay vigilant, monitor the prices and make complaints if they find businesses that violated the act


BUSINESSES may be forced to increase the prices of their goods or services due to the rise in electricity rates for commercial and industrial users.

Putra Business School Assoc Prof Dr Ahmed Razman Abdul Latiff said, however, the price increase would not be that high, considering that businesses are required to comply with the Price Control and Anti-Profiteering Act 2011.

The act was established to ensure that businesses will not charge excessive price hikes to consumers.

“There is a possibility that businesses will pass on the additional electricity cost to the consumers as many of them are still struggling from the impact of the Covid-19 pandemic.

“It is difficult to predict how much the price hike would be, as different industries will have different electricity usage but most likely, manufacturing industries will be the ones that are most affected,” he told The Malaysian Reserve.

Nevertheless, Ahmed Razman reminded the public to stay vigilant, monitor the prices and make complaints if they find businesses that violated the act.

The announcement of an electricity tariff surcharge of 3.7 sen per kilowatt-hour for non-domestic users from February to June did not sit well with business owners and traders.

Several business associations and groups have come forward to oppose the increase in electricity rates for commercial and industrial users, as many are still recovering from losses incurred during the various Movement Control Order.

Last Friday, DAP secretary general Lim Guan Eng urged the government to reverse the electricity tariff hike on businesses immediately as it may impact this year’s economic performance.

Instead, he added, the government should address concerns like labour shortage and inflation to help reduce the impact on Malaysia’s economic growth this year.

“The government must reverse electricity tariffs hike on businesses immediately to help address the six immediate concerns of businesses that may adversely impact their company’s profitability and survival as well as the 2022 economic performance to pull the country out of the current recession.

“Despite greater business activity during the Chinese New Year period, the primary concern is surprisingly a shortage of workers to cater to heightened demand.

“The inability to source workers has forced some businesses to ‘rest’ during this normally busy and lucrative period,” he said in a recent statement.

Commenting on inflation and the rising price of food as well as other basic commodities, Lim said the imposition of higher electricity tariffs on businesses through a surcharge and withdrawal of rebates is not helped by a weakening ringgit that increases the price of imports.

He also noted that the drastic drop in last year’s Transparency International Corruption Perception Index report in which Malaysia was placed at 62 from 51 in the previous year will also have an impact on businesses.

He stressed that the government has failed to respond to their own promise to consider an extension of the bank loan moratorium and interest waiver by another six months to help businesses emerging from the Covid-19 pandemic and economic recession survive and thrive.

Meanwhile, former Prime Minister (PM) Datuk Seri Mohd Najib Razak suggested that the hike in electricity rates for commercial and industrial users should be implemented in stages.

He also warned that the sudden high increase would result in operating costs going up and eventually cause a hike in prices of goods and services to the public.

“A gradual increase of the electricity tariffs by 5% every six months would be better,” he said in a Facebook post last Friday.

Najib added that the electricity costs could increase by as much as 15% with the new surcharge, depending on the different usage of commercial and industrial businesses.

He said a gradual increase over time would give better returns to the government, savings for the public and reduce the risk of inflation.

On Jan 30, the Small and Medium Enterprises Association of Malaysia (Samenta) said businesses may be forced to pass on some of the increase in operational costs to consumers.

The association also questioned Tenaga Nasional Bhd’s (TNB) increasing the price of electricity this year when it reported profits last year.

Samenta said a hike of 18.4% in utilities bill for a business which is running at a sub-10% margin could mean a reduction of profits up to 40%, which could hamper the growth and recovery of a business.

“While we will continue to urge our members to refrain from raising prices despite this steep hike in electricity bill and costs of raw materials, we must also understand that most small and medium enterprises (SMEs) are already operating on a razor-thin margin and are struggling to find their footing amid the pandemic.

“If the proposed hike continues as planned, it will be difficult, if not impossible, for businesses to absorb the increased costs without passing them partially to the consumers, just as TNB is doing,” the association noted.

Samenta also urged PM Datuk Seri Ismail Sabri Yaakob to step in to rescue the country’s ailing SMEs as he has promised to.

It added that if the hike is allowed, then the association would urge the Cabinet to consider a far lower quantum of increment without affecting TNB’s continued profitability or its “resilient performance”.