Didn't the Madani government say last year that there will not be a rise? So what has happened?
Outspoken Bersatu supreme council member Wan Ahmad Fayhsal has demanded a clear answer from prime minister Anwar Ibrahim over the “confusion” on the issue of the spike in electricity tariff which is slated to kick in effective July 2025!
In typical fashion he has accused the government of flip-flopping on the matter, and further pointed out that the rise was bound to impact the rakyat - and not just the industries and the uber rich.
How sure is the government that 85% of the populace will not be affected by the hike?
Meanwhile, PM Anwar Ibrahim has denied claims that the government had flip-flopped over the increase in electricity tariffs, saying his statement on the matter had been taken out of context.
He had also “clarified” that the electricity tariffs would be increased based on the imbalance cost pass-through mechanism, which adjusts electricity rates based on actual fuel cost fluctuations, reviewed every six months.
However, Wan Fayhsal had refuted him claiming that TNB had already informed the Securities Commission (SC) of the impending 14% increase effective July 2025!
Has the opposition Machang MP, often ridiculed for “shooting from the hip”, finally hit the “bullseye” after trying so hard?
In fact, according to industry sources, the move has prompted those in the business community to cry foul, with concerns that these measures, along with the proposed mandatory Employees’ Provident Fund (EPF) contributions for foreign workers may lead to higher operational costs and thus making Malaysia less attractive to investors!
Significantly, it also comes against a backdrop of global trade volatility sparked by US President Donald Trump's tariff war against several countries, including China, which has painted a gloomy picture for Malaysia’s export-oriented economy.
Anwar had tried to reassure the business community at a recent event, admitting that a “small increase” was necessary to generate additional revenue for the government to fund its essential public-centric projects such as schools, hospitals and roads.
However, in reality, an increase in electricity tariff will significantly affect businesses, especially energy intensive industries in the country which incidentally comprise mostly multinational companies (MNCs) and large local businesses, while a substantial increase in electricity tariff could further strain margins and adversely affect their competitiveness.
The source further reiterated that in addition to the imminent hike in electricity tariff, businesses here are also certain to feel the pinch from the mandatory EPF contributions for the 2.5 million registered low-skilled foreign workers, which will be set at 2 percent of monthly pay for both employees and employers, totalling 4 percent; these workers represent nearly 15 percent of the nation's total workforce in 2024!
It added that, as such, it is imperative that the accumulation of additional operating costs does not disrupt the markets and businesses as the sector also faces other challenges.
What about the service tax hike for logistics and the additional costs for e-invoicing?
For the record, TNB has said that coal and liquefied natural gas – 90 per cent of fuel sources in Peninsula Malaysia – are expected to rise 24 per cent and 34 per cent, respectively, in the 2025 to 2027 period.
But Wan Fayhsal was quick to highlight that neighbouring countries such as Singapore and Indonesia have all reduced their electricity cost recently in sync with global trend in light of the lower costs of fuel; as such, on what grounds can the hike be deemed fair and reasonable considering it is bound to spark a rise in the country’s inflation?
After all, is it not a fact that businesses will naturally pass on the additional operating costs to consumers in order to operate profitably? Isn't Anwar then incorrect to say that it will not affect the middle and lower income groups?
Main information source: Facebook Wan Ahmad Fayhsal, FMT and Straits Times.
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