KUALA LUMPUR: The war in the Middle East, rising energy, transport and weather-related pressures are fuelling a chain reaction that is expected to push up the cost of goods, including food, with experts calling for stronger enforcement and responsible pricing practices.
Federation of Malaysian Consumers Associations (Fomca) chief executive officer T. Saravanan said an increasingly challenging global energy landscape – shaped by geopolitical tensions, supply disruptions and volatile fuel markets – is contributing to rising costs worldwide.
“These pressures would inevitably affect the cost of living in Malaysia, particularly through higher fuel prices, electricity tariffs, and the prices of goods and services,” said Saravanan.
“In facing these pressures, Malaysians must remain calm, resilient and patient as the country navigates this period of uncertainty.”
The pressure is already visible in electricity pricing.
Yesterday, Tenaga Nasional Berhad announced that the Automatic Fuel Adjustment (AFA) for April has been set at a rebate of 0.47 sen per kWh, compared with 2.15 sen per kWh in March.
The reduced rebate of 0.47 sen per kWh, however, does not apply to domestic customers with electricity usage of 600 kWh or below, which corresponds to a bill of approximately RM215.98.
“The government has taken steps to cushion the impact on consumers, including targeted subsidies and measures to ensure global price increases do not fully burden the rakyat,” Saravanan said.
“However, there is a need for strong and proactive enforcement to prevent profiteering and unjustified price hikes.
“Continuous monitoring of supply chains and price movements is essential to ensure traders act fairly.”
He added that Malaysia has faced significant challenges before, especially during the Covid-19 pandemic.
“Fomca calls on all Malaysians to once again stand shoulder to shoulder in facing these new global challenges,” he added.
Meanwhile, Association of Water and Energy Research Malaysia (AWER) president S. Piarapakaran said water and energy systems underpin the entire economy, with cost increases cascading across multiple sectors.
“If we look at water and energy as a whole, these are key enablers of growth,” he said.
“From upstream to downstream, electricity costs are present at every stage, compounding as each layer adds its own costs.”
Fertiliser production, particularly urea, depends heavily on natural gas, which is closely linked to global crude oil prices.
“Natural gas prices have increased due to rising crude oil prices,” said Piarapakaran, who is also chief executive officer of the Centre for Water and Energy Sustainability.
“Since the Russia-Ukraine war and sanctions on Russia, there has already been an underlying issue with fertiliser supply. The situation has only worsened with the United States and Israel’s recent attack on Iran.”
These pressures have translated into higher food production costs.
“We are now in a position where many necessary policy changes were not implemented early on,” he said.
“Had these changes been made, they could have reduced the compounding impact.
“Because of delays and a lack of direct action, we now have to face the consequences. Any government announcements at this stage are likely to be reactive – essentially firefighting measures.
“For Malaysia, this should be a lesson. The key question is whether we will actually learn from it.”
Piarapakaran also raised concerns about how energy costs are passed through the system, particularly under current pricing mechanisms.
“When surcharges are imposed, businesses will pass them on to consumers. But when costs decrease, and rebates are given, prices rarely go down,” he said.
He suggested that the government work more closely with the Department of Statistics Malaysia to establish clearer pricing guidelines.
“Ideally, when prices rise, there should be guidance on how much businesses can reasonably increase prices. Instead, pricing is largely left to the market – which can lead to exploitation,” he said.
He also called for greater transparency in government policies, particularly regarding subsidies and fuel pricing disparities between Sabah, Sarawak and Peninsular Malaysia for diesel and RON97.
“If the government is subsidising fuel, it should clearly explain where the funds are coming from. Transparency is essential to maintain public trust,” he said.
Among the measures proposed, Piarapakaran highlighted the potential benefits of reverting to the Imbalance Cost Pass-Through (ICPT) mechanism and delaying the AFA.
“Returning to ICPT would provide a buffer period – typically six months,” he said.
“Passing costs on monthly can lead to frequent price spikes, especially with volatile fuel prices.”
He also revisited the idea of an energy price stabilisation fund, first proposed during electricity sector reform discussions in 2011.
“The idea is to save during stable periods and use those reserves during sudden price spikes. This would help cushion the impact,” he said.
Such a fund, he added, would reduce reliance on direct government spending during crises and provide “breathing space” during periods of volatility.
In the longer term, he suggested that Malaysia explore diversifying its supply sources for key inputs such as crude oil, natural gas, coal and fertilisers to reduce cost pressures.
“This is fundamentally a planning tool. If we can delay and manage cost increases, we can better handle the energy crisis,” he said.
