Malaysia Financial Blogger | Financial Freedom Ideas | imDavidLee.Com

The Impact of Power Tariff Hikes

The news on new electricity tariff has caught everyone dumbfounded recently. The average electricity tariff will be increased by 7.12% due to revision of gas prices for power sector.

However, those households that use 300kWh or less of electricity per month will not be affected by this high tariff rate. Meanwhile, our government will also continue to provide rebate to domestic consumers whose monthly electricity bills amount to RM20 or less until end of this year.

The increase in power tariff is also part of a plan to cut government subsidies. We have been assured that the effect of the power tariff hike on inflation would not be significant. But, we must always remind that it will trigger some increase in the cost of living although the impact is expected to be less than that from an increase in fuel prices.

My Suggestions:

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GST Malaysia 2011 & Its Implications

A Goods and Services Tax (GST) will be implemented in Malaysia soon. Basically, this consumption tax is imposed on consumers’ goods and services. However, for a business owner they also need to think carefully as they need to apply it to their business. If they fail to do that, then they may suffer the loss of the credit for input taxes.

Apparently, this GST will affect not only accounting, finance, or tax personnel, but it will affect all levels of staff also, including those from sales, operations, and even human resource.

My Opinions on GST Malaysia 2011

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Impact of the Increase in OPR

Bank Negara Malaysia raised the Overnight Policy Rate (OPR) by 25 basis points to 3% since last Friday. Following this, banks will increase the Base Lending Rate (BLR) sooner. So, for those who have variable loans especially housing loan will have to pay more in their monthly installment.

The reason for increasing the OPR is to cover the local inflationary pressures. The current inflation rate is about 2.9% and it is expected to continue to rise in latter part of the year. However, Bank Negara did a great job as they take pre-emptive action to push for economic growth before addressing the inflation issue.

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RON 97 Fuel Price Increased Again !

If you are using RON 97 petrol, then you need to pay extra 20 cents to RM 2.70 per litre effective midnight of April 1, 2011. Luckily, the price of RON 95 is remaining the same at RM 1.90 per litre else more Malaysia citizens will suffer.

Last year, our government had announced that the price of RON 97 will be based on the international oil market without subsidiary. Based on current oil prices, we know that the global oil price was increased to US$114 per barrel. I still remember the previous highest RON97 price is at RM 2.70 in year 2008, when global oil prices hit a record high of US$121 per barrel.

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What Do You Think About 6% Government Service Tax?

Effective from Jan 1, 2011, our government increases the Goods and Service Tax on all taxable services to 6% in order to generate extra tax revenue for our country development.

With this move, it will impact a great number of service industry. You may probably feel the effect of increasing service tax, you need to pay more money when visiting the fast food restaurants, or when you pay your telephone bills. However, this rate is not applicable to our credit cards where the service tax is charged at RM50 yearly on principal cards and RM25 for supplementary cards.

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