How will the increase in fuel costs affect the industries in Penang? Here is an immediate reaction from the Federation of Malaysian Manufacturers (FMM)’s northern branch chairman, OK Lee.
He said that any increase in fuel and electricity costs borne by the manufacturers would subsequently be passed on to consumers. “It’s like a price increase tsunami and people will have to brace for tough times ahead. We’re experiencing an earthquake and are in need of a disaster relief fund.
The Star reported that by noon yesterday, Lee was still busy answering numerous calls from FMM members. Lee said that as the major costs for manufacturers were electricity, gas and logistics, companies and manufacturers that were export-oriented might not be able to recover the increase in costs from the international market because of competition.
“We cannot simply increase our prices as the cost in other countries might not be so much. Those that cannot recover the costs will make less money and suffer losses. They will try to recover the costs from the market but if they can’t, they will have to think about cutting costs. This probably means cutting some employees, as they cannot cut on the goods, or migrating to a country with lower costs.”
Also, the increase in costs would be a major factor for new companies coming in to Malaysia. Lee reasoned that many companies had moved out from China because of the increase in costs. “Some were thinking of coming to Malaysia but they may have to rethink their strategy if our costs have gone up so much,” he said, adding that this would affect the nation’s foreign direct investments.
He said the federation, which had about 350 members, would study the impact of the price increase and hoped to come up with a better assessment.
In the meantime, the newspaper also reported that the effects of the fuel and electricity tariff hikes are beginning to assert themselves in other ways:
- Bus and lorry companies have announced that they are increasing charges or will be forced to stop services;
- Hawkers and other food operators will wait and see before raising prices;
- The KLCI closed 29.56 points down, to 1223.56 points. Plantation and banking counters as well as PLUS were the most affected.