WHILE the latest announcement on the windfall profit tax and the renegotiation of power-purchase agreements may benefit Tenaga Nasional Bhd, it has just raised the regulatory-risk and country-risk ratings of doing business in Malaysia.

This translates into higher costs of raising capital and a downward trend in credit appetite for big projects.

In simple words, if the windfall profit tax is implemented, the country’s risk rating will escalate and investors will leave Malaysia.

As an employee with one of the independent power producers (IPPs), I know for a fact that the IPPs are indigenous companies who have taken a bold step to invest in the high-risk sector of power generation. These producers also diligently pay corporate taxes by the millions every month and contribute to a special industry fund that supports rural electrification and other development initiatives.

It is interesting to know if the power-purchase agreement renegotiation will actually result in lower electricity tariffs, as this has an impact on the economy and the rakyat.

Some people have voiced concern about the impact of such a tax on bondholders and investors. We know for a fact that a major bondholder is the Employees’ Provident Fund. The question then will be, are we going to get lower dividend payments next year?

How about the IPPs themselves? If the windfall profit tax is implemented 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, some IPPs may close shop.

I am concerned about my job and those of my colleagues. The question that has been leaving us with sleepless nights is this: Does anyone care about Malaysians who are employed with the IPPs?

EKSID S.M.K. Kuala Lumpur

Source: NST – July 31, 2008