SMEs struggle to survive amid electricity tariff hike and a 'most business-unfriendly' government

Small and medium enterprises are among the hardest hit by the impending hike in electricity tariffs, with owners warning that their businesses may no longer survive as the government has recently imposed numerous laws that will further burden them financially.

"With an uncertain economy ahead, most SMEs are already bracing for a tough year, and will be holding back on their investments and expansion," William Ng, president of the Small and Medium Enterprises Association of Malaysia (Samenta), told MalaysiaNow.

Ng said businesses already had to spend more money to comply with the higher minimum wage, Employees Provident Fund payments for foreign workers as well as increasing fees from government agencies and local authorities.

He called on the government to provide clarity to allay business owners' fears over the tariff hike.

"The sooner an announcement is made, the better. Any increment should be minimal, otherwise many SMEs will not be able to absorb the increment in costs," he said.

Prime Minister Anwar Ibrahim recently confirmed that electricity tariffs will be increased, more than a month after a controversial Bursa Malaysia announcement by state power company Tenaga Nasional Berhad (TNB).

Anwar has maintained that the increase will not have a negative impact on the economy.

"It has to be done. Prices need to be adjusted according to current rates," he said earlier this month.

Samenta said TNB must also be transparent about its cost-cutting measures.

"At a time when businesses are expected to pay more to sustain their profitability, it is only right that the public is aware of what the company is doing to keep costs down," he said, adding that there will be SMEs that will downsize their businesses.

Meanwhile, a group representing Malay restaurant owners said it was difficult for its members to maintain current prices.

Like Ng, Nik Hassan Zain, who heads the Kelantan Restaurant Entrepreneurs Association, said many businesses would not be able to sustain themselves.

He said on average, a restaurant pays between RM2,000 and RM3,000 in monthly electricity charges.

"That means a 10% increase, or an additional RM200 to RM300 in costs," he told MalaysiaNow.

'Most unfriendly to businesses'

Nik Zahir said the current government is the "most unfriendly" to businesses and expressed concern over the additional costs incurred, from penalties imposed by government agencies to rising cost of raw materials.

He said there were more and more cases of enforcement officers inspecting businesses and penalising them for minor offences.

"For example, during a recent inspection by the Companies Commission of Malaysia, it pointed outthat there was no company registration number on a particular signboard.

"I am 67 years old and I have never experienced anything like this before. Instead of letting off with an advice, they immediately issued a RM5,000 compound," said Nik Zahir.

He said restaurant owners belonging to his association have seen a drop in sales as customers are eating out less and opting for cheaper meals.

Nik Zahir said with the reopening of schools, families would have more expenses to cope with, adding that the upcoming fasting month followed by the Hari Raya festive season would further put a strain on their pockets.

He said that while sales would increase during the festive season, they would not be as high as in previous years.

"We used to get up to RM10,000 sales during festive seasons. Now sales are between RM6,000 and RM7,000."