Kota Kinabalu: The electricity tariff increase in Sabah, which came into effect on February 1, is expected to place significant pressure on the Small and Medium Enterprises (SME) sector, particularly micro and nano businesses that operate with very small profit margins, according to the Sabah Entrepreneurs Association (Push).
Push President Jessie Ambukon said the rise in electricity costs, a basic operating expense, risks affecting the survival of small businesses, as well as limiting their capacity to grow and compete in the market.
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“Micro and nano entrepreneurs are the backbone of the local economy, but most of them do not have much financial space to absorb the sudden cost increase,” she said.
According to Jessie, electricity is a basic necessity for most small businesses, including food processing, cold storage, workshops, home-based businesses, and small-scale digital services.
“When electricity bills increase, monthly expenses also rise. This not only affects cash flow but also limits reinvestment in the business, such as hiring employees or upgrading equipment,” she said.
Jessie also highlighted the chain reaction that would follow the tariff increase. While the government introduced a 10-per cent discount for the agriculture, aquaculture, and fisheries sectors to ensure food security and supply chain stability, she said the measure was insufficient to protect the entire business ecosystem.
“Many suppliers, small manufacturers, transporters, packers and other supporting businesses do not enjoy the same discount. They have to bear the full cost of electricity increases, and these costs are ultimately passed on to micro and nano traders,” she said.
She warned that this situation would drive up the prices of raw materials and services, forcing small traders to increase product prices for consumers.
“This is an inevitable chain reaction and will ultimately put pressure on consumers and contribute to a higher cost of living,” she added.
In the medium term, Push is concerned that sustained cost pressures will stunt the development of new entrepreneurs, particularly in rural and semi-urban areas in Sabah, she said.
The situation could also undermine government efforts to strengthen the domestic economic chain and increase the rate of small business formalisation, she added.
Jessie urged the government to consider implementing a Special Electricity Discount Scheme for Micro and Nano Entrepreneurs across all sectors, not limited to agriculture.
According to her, the scheme could be implemented in a targeted and phased manner based on electricity consumption, business size, and number of employees, to prevent sudden cost burdens on small traders.
“This approach is fairer and more realistic. It not only helps maintain product price stability but also protects consumers and supports the sustainable growth of local entrepreneurs,” she said.
She stressed that Push supports the government’s efforts to improve infrastructure and ensure the sustainability of the energy sector in Sabah, but policies on basic utility costs must take into account the true capabilities of small businesses.
“Inclusive economic development can only be achieved if the most affected groups are not marginalised,” she said.
