THE government must be careful in removing electricity subsidies for big companies as it would result in the cost being passed down to consumers, said the country’s largest digital and tech association today. 

Pikom chairman Ong Chin Seong said the government’s decision to impose electricity tariff hikes should exclude small and medium enterprises (SMEs), software developers, telecommunications companies and data centres. 

“After the announcement was made, we consulted our members. Collectively, we feel that imposing the electricity hike will start to discourage potential MNCs (multinational corporations) from operating in Malaysia and could also encourage existing MNCs to look elsewhere. 

“At the same time, many companies are still struggling to rebuild their businesses post-pandemic. Furthermore, the electricity price hike will contribute to inflation,” he said in a statement, adding that the impact of the tariff hike may eventually be passed down to consumers. 

He said Pikom supports the government’s efforts in its economic recovery and wants the interests of industry players to be protected, too. 

“If the electricity hike is firmed, the government may want to consider planning out a subsidy plan or raise the hike with more strategic phases such as putting in place a time frame threshold, including tax rebates for companies paying higher tariffs. 

“We also need to consider investors such as cloud hyperscalers who are employing a lot of our highly skilled local workforce. 

“The price hike will encourage them to move and look elsewhere. The government can also see this as an approach to level the playing field so SMEs, large companies and MNCs can compete,” he said. 

Pikom represents more than 1,000 members including large tech enterprises, tech SMEs, cloud hyperscalers, software developers, telecommunications companies, data centres, cybersecurity companies and shared services companies. 

On December 14, Prime Minister Anwar Ibrahim said the government is planning to reduce the electricity subsidy – which amounts to RM30 billion annually – currently being enjoyed indiscriminately. 

He said under a new plan, the electricity tariff would be gradually increased for MNCs and the super rich. 

Households, SMEs and food and agriculture companies will not face increased electricity charges, he said. – December 23, 2022.