KUALA LUMPUR (June 26): Tapering off electricity tariff subsidies is part of Malaysia’s shift away from its low-cost model, said Natural Resources, Environment and Climate Change Minister Nik Nazmi Nik Ahmad.
Speaking at the Energy Asia 2023 conference on Monday (June 26), Nik Nazmi said the unity government's overall planned shift to targeted subsidies is part of the initiative to move away from the low-cost model.
“In the past, any country that was industrialising, whether it was Japan, Taiwan, [South] Korea Singapore and Malaysia, we started competing on low cost.
“The government heavily subsidised everything — such as fossil fuels and electricity — but now in order to move up the value chain but also to comply with the various international requirements, we (Malaysia) can’t afford to do it (pursue the low-cost model),” Nik Nazmi said.
He said this is following the footsteps of other Asian tigers, such as Singapore, South Korea and Taiwan.
Citing the imbalance cost pass-through (ICPT) hike for non-domestic consumer surcharges back in December last year, Nik Nazmi said that while he faced a lot of complaints from industry players, they eventually shifted to adapt by installing renewable energy and implementing energy efficiency programmes to cut electricity costs.
If industries previously came to Malaysia just because electricity is cheap, the government now wants people to come because they can access better workers and they also have to be able to pay higher wages, the minister said.
After attaining higher wages, Nik Nazmi said Malaysia can steadily move towards a more targeted subsidy model and reiterated that this is what the unity government has been pursuing since it took over.
He said managing the transition away from the low-cost model is something very critical to Putrajaya.
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