This article first appeared in The Edge Financial Daily on July 3, 2018

KUALA LUMPUR: The Federation of Malaysian Manufacturers (FMM) says the government’s decision to impose an electricity surcharge of 1.35 sen per kilowatt hour (kWh) for non-domestic customers with effect from July 1 will raise manufacturers’ sales cost by between 1% and 2%. This will have a major impact on the manufacturing sector, FMM president Datuk Soh Thian Lai said yesterday, urging the government to defer the implementation of the surcharge until economic conditions improve.

He said the FMM last month urged the government to stick with the current electricity tariff rate until next year to help relieve manufacturers’ energy cost burden.

“We have suggested to the government to continue with the current rate without any increase until next year because our cost of doing business is increasing every year.

“The government can increase the rate one year later and take action after everything has stabilised,” he told a press conference after the FMM’s corruption-free pledge signing with the Malaysian Anti-Corruption Commission (MACC).

Soh said that in terms of cost of goods sold, the surcharge will cause it to “increase by 1% to 2% for the entire manufacturing sector”.

“So, if the cost increases every year, how are we going to be competitive? We would like the government to be more careful [in making decisions] because Malaysia is still dependent on exporting goods [for income],” he added. Soh said the FMM would like to engage with the government, especially the international trade and industry minister, to voice its recommendations.

“They (Pakatan Harapan) just formed a new government and appointed the relevant ministers.

“We (FMM) would like to have open dialogues with the government and the minister of Miti (ministry of international trade and industry) to propose our recommendations to the government on how and what they can do for the manufacturing sector,” he said.

Soh added that he represented the FMM in a recent meeting with the Council of Eminent Persons to propose 20 recommendations to the government. He, however, did not give details of the recommendations.