Daily Express
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New power tariff painful: Industries

Published on: Wednesday, December 04, 2013

Kota Kinabalu: Local industries expect to endure a "punishing" period once the new power tariff hike is implemented next year.

Federation of Sabah Industries (FSI) Secretary, Yap Cheen Boon said businesses and industries are now having more issues to deal with, having the new tariff and several other unresolved hindrances.

These include the Cabotage Policy that has led to high logistical on-costs, limited market exposure and the recently enforced Minimum Wage Policy.

"Businesses in Sabah have traditionally suffered with higher costs of doing business compared to their peninsula counterpartsÉbeing with such unresolved hindrances while the new tariff hike will further compound the difficulties of doing business ahead," he said in a statement.

He said industries fear the inevitable increases of costs of goods and raw materials in the manufacturing distribution supply chain in response to the hike may lead to "undesirable" inflationary pressures to the local economy, especially for both and businesses and consumers.

Yap said these increases will push industries to pass the costs down to consumers to profit or an attempt by businesses to survive, adding that the 15 per cent hike will severely erode the bottom-line if not viability of businesses.

He noted that industrial and commercial groups are the heavy users of electricity and a major part of operational costs. However, with the troubling and inconsistent supply, Yap said businesses had to cease operation during blackouts and sometimes faced with machine failures without having time to recourse.

He said the new tariff is unfair and punishing as it was implemented without corresponding improvements to the service and short notice by the government.

"FSI believes the industrial and commercial segments are the core engines of economic growth. Hence, they should also be provided with assistance to cushion the tariff rise.

This should be provided in the form of tariff-free usage quota, if not delayed implementation in Sabah for 12 months, in view of the inherently erratic supply situation in the State," he said.

He noted that FSI calls for a balanced and weighted approach to ensure industries and businesses are not burdened, adding that Sabah is yet to be on the same level playing field with big players in Peninsular Malaysia.