Increase in electricity tariff surcharge and labour costs will hike new car prices, say auto component makers – paultan.org

Automotive component manufacturers have urged the government to defer the implementation of the revised electricity tariff surcharge for medium voltage (MV) and high voltage (HV) industrial users that is set to come into effect on January 1, 2023. They said that the upward revision by more than 566% to between 20 sen and 27.7 sen/kWh from the 3.7 sen/kWh currently was too sudden and dramatic, Bernama reports.

Speaking on behalf of the Proton Vendors Association (PVA), Toyota Suppliers Club (TSC), Honda Malaysia Suppliers Club (HMSC) and the Malaysian Automotive Component Parts Manufacturers Association (MACPMA), Perodua Suppliers Association (P2SA) president Helmi Sheikh Mahmood said in a statement that the increase will have “a profound impact” on every industry, regardless of size.

He said that while the group of automotive component manufacturers understands the government’s intentions to remove subsidies from MV and HV industrial users as a way to mitigate the impact of increased coal prices, the soon-to-be-implemented tariff, coupled with increased minimum wage brought about by the recently revised Employment Act 1955 (Amended 2022), would prove difficult for the companies to work around, cost-wise.

Helmi said that the rise in the minimum wage level by 25% from RM1,200 to RM1,500, coupled with reduction of weekly work hours from 48 hours to 45 hours as well as increasing the threshold of those who are entitled to overtime compensation, had already increased overhead costs considerably.

“These two factors would be too heavy for us to absorb and as a result, the industry will have to pass these costs on to customers. This would have a devastating impact on the automotive industry, as it would result in a massive increase in vehicle prices,” he stated.

“We too wish to serve Malaysia and we kindly ask the government to delay the increase in power tariffs and work with us to ensure that any changes, with regard to policies, laws, taxes, incentives, tariffs or other initiatives, will have the desired effect,” he added.

Earlier this month, prime minister Datuk Seri Anwar Ibrahim said that an electricity price hike was inevitable, stating that there would be a continued impact on the government’s finances if nothing was done. He said that while households and SMEs will not be subjected to any hike in electricity tariffs, multinational and large export-oriented companies would have to pay more for their electricity.

“The current tariffs are too low for them, and the subsidy should not be given to the large companies that make high profits,” Anwar said.

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