The proposed toll hike next year is likely to have a domino effect on industries. – The Malaysian Insider file pic, December 19, 2013.Putrajaya must assess the impact of rising electricity tariffs, wages, taxes and an impending toll hike as higher costs will push the local iron and steel sector into the doldrums, an industry group said today.
The Malaysian Iron and Steel Industry Federation (Misif) urged the Government to consider the move to raise toll charges next year, saying highway concessionaires enjoyed considerable profit and were not affected by currency fluctuations, higher electricity rates and fuel prices, unlike the manufacturing sector.
“We are already facing fierce competition from imported steel products from all over the world and there has been a large influx of imported iron and steel materials,” Misif president Datuk Soh Thian Lai said in a statement in Kuala Lumpur today.
“All our efforts in penetrating export markets painstakingly built over the years would also be derailed,” he said, referring to the rising manufacturing costs in Malaysia.
Putrajaya has confirmed a toll hike is due next month and media reports said it could vary between 50 sen and RM1 across 15 highways in the peninsula.
News of a toll hike comes after the Government implemented a chain of cuts as part of its subsidy rationalisation to minimise the country’s fiscal deficit and improve investors’ confidence. In September, petrol and diesel prices were increased 20 sen per litre followed by an immediate eradication of the sugar subsidy which was 34 sen per kg.
Electricity tariffs are also going to increase next month by 14.98% for households and 16.85% for commercial and industrial users.
The authorities are also reviewing public transport fares for the Light Rail Transit (LRT) and Monorail in Kuala Lumpur, where property owners face higher assessment rates which were last changed 21 years ago.
Soh said the recent wave of regulatory decisions, such as the minimum wage policy, extension of retirement age, hike in electricity tariffs and fuel prices, were "already having an adverse impact on the cost of doing business, whereby contributing to higher manufacturing costs, thus affecting the viability and competitiveness of the domestic iron and steel industry".
"The recent announcement on the hike in toll charges and its effect on logistics and transport costs would compound matters and push the iron and steel industry further into the doldrums."
Soh said concessionaires have enjoyed "a tremendous increase in traffic volume which has resulted in considerable profit for them" since signing their agreements.
"There have also been frequent complaints of highways being congested and which has had a cost impact on businesses," he added. He said the use of heavy vehicles to transport iron and steel products on alternative roads was not practical mainly because of safety concerns.
Soh said the association wanted the Government to assess fully the impact of "the hike in electricity tariffs, wages and the GST on the industries and the nation’s overall economic wellbeing first before considering any increase in toll rates". "The assessment study should be made public to all stakeholders before any final decision is made." – December 19, 2013.