THE rise in electricity tariffs for commercial and industrial users will slow down the recovery of businesses suffering from the economic impact of Covid-19, the Small and Medium Enterprises Association of Malaysia (Samenta) said today.

It said the hike of 11.8-18.4% would also cause the prices of goods to rise and SMEs are forced to pass the cost to customers.

“While we can understand the need for periodic adjustments in prices, we cannot accept the quantum or the timing of it, especially since Tenaga Nasional reported a 9.6% and 4.6% jump in revenue and earnings, respectively, for the nine months ending September 30, 2021,” Samenta Central chairman William Ng said in a statement.

“We urge Prime Minister Ismail Sabri Yaakob to step in to rescue our ailing SMEs like he has promised to do.

“If the hike must be allowed, then we urge the cabinet to consider a far lower quantum of increment without affecting Tenaga Nasional’s continued profitability or its ‘resilient performance’.”

The government recently announced higher electricity tariffs for commercial and industrial users effective February 1. More than 1.6 million accounts will be affected.

Ng said that for most SMEs, especially those in the manufacturing sector, electricity was the second- or third-largest cost factor after raw materials and labour.

“A hike of up 18.4% in utilities bill for a business that’s running at sub-10% margin could mean a reduction of 20-40% of profits and could even mean a difference between making and losing money.

“If the hike proceeds as planned, it will be difficult, if not impossible, for businesses to absorb the increased costs without passing them partially to the consumers, just as Tenaga Nasional is doing,” he said.

Samenta, established in 1986, is Malaysia’s oldest association of small and medium enterprises. – January 30, 2022.