I'm very worried about the latest economic developments. Price increases seem to be never-ending. Policy and economic uncertainties further add to an increasingly fragile climate in the country.
The latest announcement on a windfall tax on independent power producers appears focused on providing the government with additional revenue and the proposed IPP renegotiations appear to be focused on mitigating Tenaga Nasional’s costs and ‘reducing the burden of the rakyat ’.
Looking at the figures, the government expects to collect about RM500 million per annum from the tax. This sum is relatively insignificant when compared to our development expenditure of over RM40 billion per annum.
How far will the sum go to reduce the burden of the rakyat ?
The net result of the tax will also raise the regulatory and country risk ratings of doing business in Malaysia. This will inevitably translate into higher costs of raising capital, thus forcing a downward trend in credit appetite for big projects in the country.
Simply put, if windfall tax is implemented, the increased risk will scare away investors.
It appears then that the government has decided to strong-arm the IPPs back to the negotiation table with a GLC. In so doing, the IPPs have been unfairly perpetuated as ‘uncooperative profiteers’.
As an employee with one of the IPPs, I know for a fact that the IPPs have taken a bold step by investing in a high-risk and capital intensive power generation sector. The IPPs diligently pay corporate taxes by the millions every month and also contribute millions to a special industry fund that supports rural electrification as well as other industry development initiatives.
We should take this into consideration before passing any judgment on the IPPs.
A prominent banker has voiced his concern about the impact of such a tax on bondholders and investors. We know for a fact that a major bondholder is the EPF so does this therefore mean that we should also prepare ourselves for lower dividend payments next year?
If the power producing agreements are successfully renegotiated, will this actually translate into lower electricity tariffs for us?
If the windfall tax is implemented for all the IPPs, without exception, they will suffer huge losses. The first thing that will happen is that some employees may be retrenched. Worse still, if the losses continue, IPPs will definitely close shop.
Who will be responsible for the loss of employment of thousands of locals employed by the IPPs?
I am concerned about my job as well as those of my colleagues. These questions have been giving us sleepless nights. Does anyone not care about us Malaysians who are employed with the IPPs? We already have enough to worry about as consumers ourselves.
