Cement Producers Call For Ceiling Price Review


26 May 2006


KUALA LUMPUR, May 26 (Bernama) -- The Cement and Concrete Association of Malaysia (C&CA) has estimated the new electricity tariff to cost the industry an additional RM64 million, and called on the government to review the current cement ceiling price.


According to the association, the additional burden comes after an approximate 30 percent increase in production cost between 1995 and 2005, particularly in the last couple of years with the major rise in price of coal and additional 15 percent increase in logistic cost due to the higher diesel price since August 2005.


It said the current cement price no longer reflected the market situation and a revision was long overdue and justified.


Expressing its disappointment over the electricity tariff hike, C&CA said the cement ceiling price that was revised in 1995 was now lower than the domestic selling prices in most countries in the region.


"One has to be reminded that cement being a strategic item is regulated by the Control of Supplies Act and the Price Control Act. The industry, therefore, cannot pass down the additional costs to consumers because of price control," the association said.


C&CA said the industry has exhausted all its avenues of cost mitigations after having invested additional capital to improve the reliability and productivity of its plants following the major cost increases in the past years.


"It is no longer feasible to expect the cement industry to absorb the impact of the increase in electricity tariff when the last revision of ceiling price of cement was in 1995, some 11 years ago when the ringgit was significantly stronger than today and when costs of capital equipment, spare parts, fuel and materials were much lower," the association said.


Meanwhile, the Malaysian Association for Shopping and Highrise Complex Management estimated the 12 percent hike in the electricity tariff for the sector to cost RM48.2 million per month for the shopping centre managements and owners maintaining common facilities.


This excludes electricity consumed by all other retailers like hypermarkets and departmental stores and other tenants in shopping centres, food and beverage businesses as well as entertainment and leisure outlets, it said.


The association said electricity contributed about 30 percent of the total operating cost of maintaining common areas and facilities in shopping centres.


It urged the authorities to review the tariff hikes for the shopping industry and suggested that the industry be granted industrial tariff for its electricity consumption.


It also called for lower tariff rates between 7pm and 7am to enable shopping centres and retailers to offer a more inviting ambience for shoppers.


The association said the Malaysian retail industry was a major contributor to the tourism sector, comprising RM6.6 billion or more than 20 percent of the total tourism receipts of RM31.9 billion in 2005.