(Adds economist comment, details)
By Stuart Grudgings
KUALA LUMPUR Dec 2 Electricity tariffs in
Malaysia will rise by around 15 percent next year, the
government said on Monday, as higher-income consumers and
companies in the Southeast Asian nation feel the impact of moves
to cut the country's heavy fuel subsidy bill and reduce its
The electricity charge would rise by 14.89 percent on
average in peninsula Malaysia as part of the government's
"subsidy rationalisation" measures outlined in the country's
annual budget announcement in October, energy minister Maximus
Malaysia's electricity tariff was last revised in June 2011
when the government hiked the price of subsidised gas to the
power sector to 13.70 ringgit per million metric British thermal
units from 10.70 ringgit.
Prime Minister Najib Razak's budget outlined a cut in the
government's total subsidy bill by 15.6 percent next year.
Under pressure to rein in spending and boost tax collection
to tackle Malaysia's high budget deficit and fast-growing debt
pile, Najib also announced a new consumption tax that will come
into force in 2015.
Ongkili said that the power tariff hike would save the
government about 4 billion ringgit ($1.25 billion) in subsidies
next year, according to state news agency Bernama. In a
statement, he said that about 71 percent of consumers in
peninsula Malaysia would not be affected by the increase, due to
exemptions for low-income Malaysians.
"Since 1997, the government has fixed the domestic price of
gas at a much lower level than the market rate to ensure that
all segments of society enjoy affordable electricity tariffs,"
the statement said.
Manufacturers in Malaysia's export-driven economy have
expressed concern that the sharp hike in energy costs next year
could hurt their competitiveness.
The tariff hike will push up inflation, which could add
pressure on the central bank to tighten monetary policy for the
first time since May 2011, said Barclays Capital economist Rahul
But any negative impact on growth should be limited, partly
due to the broad exemptions for consumers, he said.
Malaysia's economy grew 5 percent year-on-year in the third
quarter, driven by resilient domestic demand and a recovery in
"Growth is already fairly strong in Malaysia and with global
activity picking up, we should see it well supported," said the
Shares in Malaysian state power firm Tenaga Nasional Bhd
were suspended from trade earlier on Monday pending an
announcement, which is expected to be related to the national
The new rates are effective from Jan. 1.
(Reporting by Stuart Grudgings; Editing by Kim Coghill)