Malaysia’s electricity tariff hike...YOU HAVE BEEN WARNED!

ELECTRICITY TARIFF HIKE...YOU HAVE BEEN WARNED!

Well, if you have not heard the news, then it's time to tune into it...because beginning in January 2014, electricity tariff in the country will rise by around 15%. 

It is not a standard increase...but the average is about 15%. In the Peninsular Malaysia, the increase is about 14.86% while it is about 17% for Sabah and Labuan. 

In Peninsular Malaysia, the rate will be about 38.53sen/kWh from the current average rate of about 33.54sen/kWh while Sabah and Labuan will seen an increase from 29.52 sen per kWh to 34.52sen per kWh. The Sarawak state will not be affected by the rate though, as the electricity supply in the state is operated by state-run company, Sarawak Energy.

Of course, not all is bad news as those who use below 300kWh a month will not be affected. So, if your monthly electric bill is about RM77, you will not be affected. So, try to stay below this and you will be okay. 

check out the new rate

Well, there are of course valid reasons for us as Malaysians to be upset with this increase...here are the justification for the increase:

I read this from The Star Online...

The Government cannot continue to subsidise increasing fuel prices. The country needs to move from blanket to targeted subsidies as it tends to result in an inefficient allocation of resources and, therefore, distorts the economy.

According to the 2011 International Monetary Fund (IMF) report, when low to medium-income countries apply blanket subsidies, about 46% of the energy subsidies benefit only the top 20% of society, with only 7% reaching the lowest 20% of the population.

This is because the rich generally consume higher volumes of scarce resources compared with the poor.

The consumption by the rich could almost be limitless, if the goods are too cheap. For the poor, however, their consumption is always limited, no matter how cheap a resource/good may be.

Adjustment of electricity tariffs is one of the steps to restructure subsidies into a form that is more targeted and sustainable.

And the more important question: if the rise next year 2014 will already be a burden to the consumers (Rakyat), what happened in 2015 when the GST is implemented?

As per Budget 2014, GST will be imposed on all consumers with effect from April 2015.

However, domestic consumers using 1-200 kWh per month will not be subject to the GST.

Furthermore, they will not be affected by the tariff hike from January.

Well, I guess the simple statement would be this: like it or not, the electricity hike is happening. 

And of course, the bigger concern is how will business owners pass these costs to the consumers? Increase prices? So the next question: inflation? Well, BNM sees 0.4% increase in inflation due to tariffs hike...currently, the inflation rate is at 2.8% and with this, it means the inflation rate would have just touch over 3%.

There are a lot of justification for the hike...the need to educate Malaysians on the right way to spend, to cut budget deficit, etc etc....well, probably it's just a bit too overwhelming at this point of time. First is the petrol, sugar, GST and now this hike. Are Malaysians ready? That's probably a question we are about to find out...

Anyway, there is one good news out of this, especially for those of you who bought the Tenaga Nasional Berhad stock, a big jump in the stock market...

I am not sure about you but as for me, I think it's time to plan my expenses well....the hard times are coming for sure...at least for the coming years...