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FMM PRESS STATEMENT: Defer Any Upward Revision in Electricity Tariff and Give Sufficient Notice

Kuala Lumpur, January 28, 2022 – The Federation of Malaysian Manufacturers (FMM) notes that the Government had earlier deferred by one year the review of electricity base tariff under Regulatory Period 3 that was originally scheduled to commence in January 2021 due to the uncertainties and severe business impact following the COVID-19 pandemic. While FMM is grateful for the one-year extension where the base tariff and ICPT rebate were maintained throughout 2021, FMM is of the view that this is not the right time to impose any upward revision in tariff especially for the manufacturing sector as many industries are still in a vulnerable position now as they continue to recover from the Covid-19 pandemic and the impact that it has had on their sustainability.

FMM is also disappointed that it is not engaged given the present circumstances and the difficulties faced amidst the current COVID-19 operational challenges and risks that are still looming with the highly contagious Omicron variant. As it is now, industries are already struggling with inflationary pricing on almost all business costs and would struggle to deal with higher prices of energy which would also have a cascading effect on other cost items especially raw materials that may further increase inflation. If operation costs continue to increase, manufacturers may need to make some adjustments to their operational costs either by increasing the product prices which is the last resort due to the competitive market or other cost rationalisation strategies such as reducing administrative and personnel expenses including freezing hiring which would derail business recovery efforts. Manufacturers' ability to absorb higher operational costs in this current fragile period is very limited.

FMM would also like to reiterate that any base tariff review should also address the long standing cross-subsidisation in the electricity tariff categories towards creating a more energy efficient and sustainable energy usage in the country. Due considerations should be given to the energy-intensive but efficient companies as well as companies that have invested in energy efficient and renewable energy initiatives in line with the Government’s commitment to reduce greenhouse gas emissions.

FMM appeals to the Government to defer any upward increase in electricity tariff preferably until the global supply chain constraint have eased and the commodity prices normalise as the manufacturing sector which makes-up approximately 37% of TNB’s electricity sales is also faced with other challenges to support their recovery including manpower shortages, export constraints due to the higher freight rates, etc. FMM also calls for the effective date of any tariff review to factor in sufficient time to the industry, especially exporters, to adjust accordingly.

Tan Sri Dato’ Soh Thian Lai
President, Federation of Malaysian Manufacturers

FMM Advocates Transparency, Integrity and No Corruption

About FMM
The Federation of Malaysian Manufacturers (FMM) has been the voice of the Malaysian manufacturing sector since 1968. Representing over 11,300 member companies (3,500 direct and 7,800 indirect) from the manufacturing supply chain, FMM is actively engaged with government and its key agencies at Federal, State and local levels. FMM is also well-linked with international organisations, Malaysian businesses and civil society. Apart from benefitting from FMM’s advocacy, FMM members enjoy value-add services, including training, business networking and trade opportunities as well as regular information updates.

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