Image credit: Malay Mail
PETALING JAYA: The business fraternity wants the government to have long- and short-term plans to mitigate higher prices due to inflation fuelled by the Covid-19 pandemic.
Among them is to defer the increase in electricity tariff surcharge for commercial and industrial users and the implementation of raising the minimum wages to RM1,500 from the current RM1,200 by the end of the year.
While most businesses are still struggling to recover, they said any additional cost burden would eventually be passed on to consumers, further aggravating the increase in prices and inflation.
SME Association of Malaysia president Ding Hong Sing said the recent worldwide price hike happened due to many factors brought about by the pandemic.
“These factors include the rise of logistics cost and freight container rates, increased commodity and raw material prices, energy issues and foreign labour shortage.
“The price increase will not just be on food items.
“It does not make sense for businesses to keep absorbing the cost and make losses. However, it is also not good when both costs and selling are high.
“Government subsidies are good but only as a temporary measure. Therefore, it is important to find a better solution with the government helping producers and manufacturers tackle the high-cost problems,” he said.
Ding anticipated the costs of raw materials will increase between 10% and 40%, while the retail price of all finished goods will go up by 25% with the new electricity tariff surcharge for commercial and industrial users.
Considering the company’s present hardships, Ding said, “It is not the right time for the government to increase the electricity surcharge and raise the minimum wage. However, some leeway should be considered when we are not even fully recovered from the onslaught of the pandemic.”
He said raising the minimum wage will also hit them hard “as the quantum is a big jump from the current amount”.
Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai also shared the same sentiment, saying things should wait until the economy stabilises and the industries recover from the Covid-19 impact.
“Industries face an array of challenges while struggling to recover as operations return to some level of normality amid the continued risks from the pandemic.”
Based on a recent FMM survey, Soh said the largest increases in cost components were due to raw materials and logistics costs, especially freight and warehouse costs, followed by parts and packaging costs, and labour, due to a shortage.
“We will need various government bodies to intervene to ensure that inflation is under control, particularly on essential items.
“It is important there is no additional cost burden on the industries,” he said, adding that any further cost pressures can derail their business recovery and growth.
Soh said the electricity surcharge had increased electricity bills between 13.7% and 15.8% for low voltage industrial users, mostly SMEs, while medium and high-voltage industries saw a hike of 18.4%.
“Early notification was not given to allow industries to adequately adjust for the imposition of the surcharge, which led to increased production cost.
“The government should defer the surcharge for industries, preferably until the global supply chain constraint has eased and the commodity prices normalised,” he said.
Soh also urged the government to consider a more gradual adjustment to the minimum wage rate and to consider the impact on multi-stakeholder.
On Jan 29, Prime Minister Datuk Seri Ismail Sabri Yaakob reminded companies and industry players not to raise the prices of goods, although their electricity bills are expected to increase following the loss of rebates and the imposition of a surcharge.
He said the government had spent over RM1bil in subsidies to industrial and commercial companies before this and this subsidy concept is flawed, as it benefited larger companies and not the targeted groups such as the poor.
Source: https://www.thestar.com.my/news/nation/2022/02/14/find-ways-to-mitigate-inflation