KUALA LUMPUR (Dec 23): The government's announcement to increase electricity tariffs may discourage potential multinational corporations (MNCs) from operating in Malaysia, according to the National ICT Association of Malaysia (Pikom).

“[This] 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,” Pikom chairman Ong Chin Seong said in a statement on Friday (Dec 23).

He stressed that the increase in electricity rates should be carefully considered and that small and medium enterprises (SMEs), software developers, telecommunications companies and data centres should be exempt, as the impact of the rate increase could ultimately be passed on to consumers.

Ong said Pikom supports the government's efforts to recover the economy and address the interests of the rakyat, and hopes that this will also apply to key industry players such as SMEs, telecommunications companies and data centres, as they support the growth of the domestic market and drive the country's digitisation initiatives.

“If the electricity hike is firmed, the government may want to consider panning out a subsidy plan or raise the hike with more strategic phases such as [putting] in place a timeframe 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,” Ong concluded.

Last week, Prime Minister Datuk Seri Anwar Ibrahim indicated a potential increase in electricity tariffs on the horizon for multinational companies that export and no subsidy for selected profitable "giant" companies.