kuala lumpur: The Federation of Malaysian Manufacturers (FMM) on 18th December has announced that the Minister of Natural Resources, Environment and Climate Change (NRECC) on 16th December 2022 will increase the surcharge on electricity tariffs for domestic and low voltage non-domestic users. We welcomed the announcement about no increase. From 1 January to 30 June 2023.
However, Tan Sri Soh Thian Lai, President of FMM, expressed concern about the significant increase in electricity tariff surcharges for the medium and high voltage industries and said that in order to alleviate some of these costs, a appealed to the government for more tiered and sustainable surcharge rates. Industrial users during this period of lingering uncertainty.
He noted that while FMM appreciates the decision that low-voltage users will not be affected by the surcharge hike due to the January-June 2023 Imbalance Cost Pass-Through (ICPT) review, medium-sized An increase of over 44% in surcharges for (MV) and high voltage (HV) users will pose significant concerns and challenges for this category of users over the next six months.
This requirement will make it difficult for MV and HV industrial users, including medium and large local and multinational corporations (MNCs), to face the challenges of high operating costs, given the impact of high inflationary pressures, minimum wages and an increase in the labor force. He added that it was a consideration of being equally affected. Shortages, rising transportation costs, disruptions to his global supply chain, and a weaker ringgit.
He said it was important to note that these companies have made significant contributions to the Malaysian economy in terms of:
* Significant investment by multinationals and large local companies: Over the past decade (2012-2021), foreign direct investment (FDI) reached RM761.7 billion (35.8%), while domestic direct investment (DDI) reached RM1,364.6. 1 billion (64.2%) in all sectors of the economy. The manufacturing sector he accounted for an investment of RM818.4 billion. Specifically, in 2021, the manufacturing sector contributed significantly to the economic recovery. Of the total approved investment of RM306.5 billion, the manufacturing sector accounted for RM195.1 billion or 63.7% of the approved investment, of which 92.1% was FDI and 7.9% DDI.
* Substantial contribution to GDP: According to the National Accounts Report of Small and Medium Enterprises (MSMEs) in 2021, the contribution of non-MSMEs to GDP will increase by 4.4% in 2021, accounting for 62.2% of Malaysia’s GDP or RM868 accounted for 800 million. On the other hand, medium-sized companies (enterprises with annual revenues in the manufacturing sector where he is between RM50 million and RM500 million and in the service sector where he is between RM20 million and RM500 million) contributed 40% of the GDP in 2021.
* Largest employer: In 2021, large companies employed about 8 million people (52%), and 53% of the country’s total employment and manufacturing sector employment.
Given that the monthly electricity bill that a particular company must pay can range from 1% to 10% depending on the size of the business and industry subsector, Mr. He said he proposed the following to avoid significant adverse impacts on: Given the intense competition among regional competitors, it is likely to become even less competitive, especially in the export market.
* There is a grace period of 3 months, a surcharge of 6.3 Sen/kWh will apply in April 2023, and a surcharge of 10 Sen/kWh will apply until October 2023. The proposal expects the July 2023 surcharge to be lower based on trends in energy prices.
* Temporarily suspending 1.6% contribution to the Renewable Energy Fund for the next six months for categories of customers affected by the surcharge increase.
Considering that the global environment is expected to be difficult in 2023, Soh added that if global demand is expected to fall, manufacturers will have to cut costs, so additional A more gradual increase in tariffs would also help avoid a recession in the economic recovery, he said. This could include a hiring freeze and the suspension of expansion plans and projects until the market normalizes.
The FMM wants to underscore that the industry is in a very precarious position given the many challenges it faces, and that gradual changes to targeted energy subsidies We want the government to be closely involved in the transition.
Soh said the FMM will meet with the Department of Natural Resources, Environment and Climate Change to discuss concerns from manufacturers in more detail and discuss more favorable solutions such as energy costs and industrial consumers using natural gas in the market. Said he wanted to talk. Prices are doubly affected by the upward trend and volatility in global energy prices.