'Industries ready for power tariff changes'
Published: May 30, 2011 11:06 PM | Updated: May 31, 2011 1:31 PM
Malaysian industries are prepared for the subsidy rationalisation programme, said Minister of International Trade and Industry, Mustapa Mohamed.
Mustapa said the ministry has discussed with them on the electricity tariffs and they were okay with the adjustment, which they said must not be too steep.
Malaysian industries are prepared for the subsidy rationalisation programme, said Minister of International Trade and Industry, Mustapa Mohamed.
Mustapa said the ministry has discussed with them on the electricity tariffs and they were okay with the adjustment, which they said must not be too steep.
"The public understood the government's move as it would be good for the country," he told reporters at the convocation of halal executive programme graduates in Kuala Lumpur today.
As part of its ongoing subsidy rationalisation exercise, the government today announced that average electricity tariffs will be raised by 2.23 sen per kilowatt hour (kWh), or 7.12 per cent, to 33.54 sen kWh, from 31.31 sen kWh effective Wednesday, June 1.
However, the move will not affect about 75 per cent of the population who mainly consume less than 300 kWh per month.
Mustapa said the changes in electricity tariff would have a minimal impact on inflation.
"We will be cheating ourselves if we said there is no impact," he said.
Inflation may edge up slightly
Meanwhile, the tariff increase will not dent Malaysia's growth prospects although inflation may edge up slightly from
June onwards.
In an email interview with Bernama today, RAM Holdings Bhd group chief economist Yeah Kim Leng said the increase was not expected to be large, estimated at between 0.1 and 0.2 percentage point, in the headline consumer price index.
In April, Malaysia's inflation rate rose to 3.2 per cent year-on-year, after a three per cent increase in March.
"Given the sharp increases in coal and gas prices since the global economic recovery last year, the revision cannot be delayed further as they are impacting the financial standings of Tenaga Nasional Bhd and Petroliam Nasional Bhd as well as the government's fiscal position," he said.
Yeah, who was for the increase, said the magnitude did not come as a surprise as the public had been alerted on the government's subsidy rationalisation programme.
"The increase is less than 10 per cent, which is within the range expected by the market.
"It is heartening to note that the minimum threshold for 75 per cent of domestic household users is maintained," he said.
Unlikely to be big headache
On the 25 per cent of the Malaysian households impacted directly by the increase, Yeah said, it was not likely to be big headache for them - middle-to-upper income segments.
"The increased financial burden may be mitigated by cutting electricity usage.
"They need to pay close attention to energy conservation measures and perhaps adopt a low carbon footprint lifestyle, which they had not heeded before the electricity increases," he said.
Bank Islam Malaysia Bhd chief economist Azrul Azwar, said the manufacturers should not take advantage of the new rates as they were not significant for them to increase the prices of their products.
"Thus, stringent enforcement by the government is needed to monitor any price increase in the consumer goods and services," he said.
The government today announced that average electricity tariffs will be raised by 2.23 sen per kilowatt hour (kWh), or 7.12 per cent, to 33.54 sen kWh, from 31.31 sen kWh, effective Wednesday, June 1, a part of its ongoing subsidy rationalisation exercise, which will help to put the government in a comfortable financial position.
- Bernama
Mustapa said the ministry has discussed with them on the electricity tariffs and they were okay with the adjustment, which they said must not be too steep.
"The public understood the government's move as it would be good for the country," he told reporters at the convocation of halal executive programme graduates in Kuala Lumpur today.
As part of its ongoing subsidy rationalisation exercise, the government today announced that average electricity tariffs will be raised by 2.23 sen per kilowatt hour (kWh), or 7.12 per cent, to 33.54 sen kWh, from 31.31 sen kWh effective Wednesday, June 1.
However, the move will not affect about 75 per cent of the population who mainly consume less than 300 kWh per month.
Mustapa said the changes in electricity tariff would have a minimal impact on inflation.
"We will be cheating ourselves if we said there is no impact," he said.
Inflation may edge up slightly
Meanwhile, the tariff increase will not dent Malaysia's growth prospects although inflation may edge up slightly from
June onwards.
In an email interview with Bernama today, RAM Holdings Bhd group chief economist Yeah Kim Leng said the increase was not expected to be large, estimated at between 0.1 and 0.2 percentage point, in the headline consumer price index.
In April, Malaysia's inflation rate rose to 3.2 per cent year-on-year, after a three per cent increase in March.
"Given the sharp increases in coal and gas prices since the global economic recovery last year, the revision cannot be delayed further as they are impacting the financial standings of Tenaga Nasional Bhd and Petroliam Nasional Bhd as well as the government's fiscal position," he said.
Yeah, who was for the increase, said the magnitude did not come as a surprise as the public had been alerted on the government's subsidy rationalisation programme.
"The increase is less than 10 per cent, which is within the range expected by the market.
"It is heartening to note that the minimum threshold for 75 per cent of domestic household users is maintained," he said.
Unlikely to be big headache
On the 25 per cent of the Malaysian households impacted directly by the increase, Yeah said, it was not likely to be big headache for them - middle-to-upper income segments.
"The increased financial burden may be mitigated by cutting electricity usage.
"They need to pay close attention to energy conservation measures and perhaps adopt a low carbon footprint lifestyle, which they had not heeded before the electricity increases," he said.
Bank Islam Malaysia Bhd chief economist Azrul Azwar, said the manufacturers should not take advantage of the new rates as they were not significant for them to increase the prices of their products.
"Thus, stringent enforcement by the government is needed to monitor any price increase in the consumer goods and services," he said.
The government today announced that average electricity tariffs will be raised by 2.23 sen per kilowatt hour (kWh), or 7.12 per cent, to 33.54 sen kWh, from 31.31 sen kWh, effective Wednesday, June 1, a part of its ongoing subsidy rationalisation exercise, which will help to put the government in a comfortable financial position.
- Bernama
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