PUTRAJAYA’S decision on raise electricity tariffs will have a severe “knock-on effect” on economic growth and inflation, the National Tech Association of Malaysia (Pikom) chairman Ong Chin Seong said today.

He said higher electricity rates effective January 1will negate any effort of the government to cushion the effects of inflation.

“The impact of such a move to increase the surcharge is ill-timed considering the country is battling the twin effects of rising inflation and the weakening of the ringgit,” he said in a statement.

Ong said as the country is emerging from the pandemic, the surcharge adds a burden on businesses.

He said the cost will eventually be passed on to the consumers.

The government has recently explained that only multinational corporations (MNCs) and big companies making huge profits will be charged higher rates for electricity.

Domestic users, small- and medium-size enterprises (SMEs), agricultural companies and food producers are exempt.

Ong said medium and high voltage users can expect an increase of about 40% in electricity charges as a result of a higher CPT (imbalance cost pass-through).

“For heavy power users such as data centre operators or cloud service providers, this has a significant impact on their operating expenses.

“The ICPT mechanism is applied to (accommodate) the movement in global fuel prices. 

He added that a 5.4-times increase in the ICPT rate from the present rate RM0.037/kWh to RM0.20/kWh will result in an about 40% increase in electricity cost.

“Pikom is cognisant of the prevailing high fuel prices that has a crippling effect on growth of the economy.

“However, we appeal to the government to implement the hike in stages to allow for the industry and economy to adjust and absorb some of the increases in a progressive manner.”

Pikom is the largest digital and tech association representing more than 1,000 members who are SMEs and MNCs, cloud hyperscalers, software developers, telecommunications companies, data centres, cybersecurity companies and shared services companies.  

“As a sector providing over 1.1 million jobs in the country, the technology industry is concerned that our competitiveness vis-a-vis our regional peers will be curtailed.

“This is the time to assist our industry, not hamper its recovery,” he said. – January 6, 2023.