Natural resources and environmental sustainability minister Nik Nazmi Nik Ahmad said Malaysia must move away from its reliance on low-cost utilities and labour to remain competitive and environmentally sustainable.
Speaking at the National Climate Governance Summit at Sasana Kijang today, he defended recent tariff hikes and subsidy reforms as necessary steps in repositioning the economy toward higher-value activities.
“The increase in electricity and water tariffs, and the upcoming rationalisation of RON95 petrol subsidies, are not easy moves—but they are essential,” he said. “We’ve long depended on emission-heavy industries and cheap resources for growth. That model is no longer viable.”
Nik Nazmi acknowledged that some businesses have pushed back against the changes. “I’ve had billion-ringgit companies tell me these hikes are disastrous. But the truth is, they’ve benefited from unrealistically low rates for too long. This adjustment is overdue.”
He said Malaysia’s historical focus on infrastructure like highways and a national car brand came at the cost of under-investment in public transport systems like rail and buses—sectors that now hold the key to value-added, climate-aligned development.
Citing examples like Japan, South Korea, China, and Singapore, he noted that these economies began as low-cost producers but moved up the value chain through innovation and services. “Malaysia must follow suit. Our addiction to cheap utilities and low-wage labour must end.”
The government has announced key reforms to improve fiscal sustainability. Among them is a plan to implement targeted RON95 subsidies by mid-2025. Tenaga Nasional Bhd will also raise base electricity tariffs in Peninsular Malaysia by 14.2% in July to meet rising energy demand, especially from the growing data centre sector.
“These are not just economic adjustments—they are environmental imperatives. It’s time we bite the bullet,” Nik Nazmi said.–FMT
