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Utility rate hike worries Malaysian plastics group

By: Gurdip Singh

January 9, 2014

KUALA LUMPUR — The Malaysian Plastics Manufacturers Association (MPMA) has expressed its concern over the 16.85 percent increase in the electricity tariff for the industrial category, which was implemented Jan. 1.

"Given that electricity is the second largest cost component in the manufacture of a plastic product, the drastic increase in electricity cost will cause the plastic products made in Malaysia to be less competitive in the international market and, consequently, exports would be adversely affected," said MPMA President Lim Kok Boon.

"Other export-oriented and energy-intensive manufacturing industries in the country would also be expected to be similarly affected."

In addition, Lim pointed out that the proposed increase in valuation of property and assessment rates by the Kuala Lumpur City Hall and Ipoh City Council is too excessive and unreasonable.

"Some of our members are hit by a 600 percent increase, which is far too drastic," added Lim.

Lim said the plastics manufacturers were already facing a drastic cost increase following the increase in minimum wages, which also went into effect Jan. 1.

"While we understand the government's need to rationalize subsidies and increase the assessment rate, however, a sudden and huge increase would have serious adverse effects on the manufacturers. The recent announcement on the proposed toll increase will be further a burden to our members," Lim said.

He urged the government to look at a gradual increase in the electricity tariff over a reasonable period, and that any rate should not exceed 10 percent.

Lim also recalled MPMA's past call on the government and the electricity board to extend the off-peak rates to all the plastics manufacturing companies as this would assist in mitigating the impact.