“The pass-through of the cost savings usually tends to be incomplete or sticky,” the Sunway University lecturer told FMT, adding that the savings would more likely boost the firms’ earnings.

Yeah also said non-domestic users will welcome the surcharge cuts which will offset the increase in material, labour and imported input costs caused by the weakening ringgit.

“The surcharge cut is also reflective of the current administration’s responsiveness to the burden faced by affected users, as well as its earnestness in addressing inflation woes that have hit most economies since February last year and war in Ukraine,” he added.

The economist was responding to an announcement by the natural resources, environment and climate change ministry on June 23 that non-domestic electricity users would see a surcharge reduction from 20 sen to 17 sen/kWh for the second half of this year in a bid to rein in inflation.

Malay Mail reported Mareena Mahpudz, the ministry’s senior undersecretary in charge of electricity, as saying that the surcharge cut should bring electricity bills down by 28-35%.

The report also quoted the ministry’s deputy secretary-general Razif Mubin as saying that the cuts would prompt companies to lower their prices accordingly.

Meanwhile, Shaun Cheah of the Malaysian International Chamber of Commerce and Industry said the announcement signalled Putrajaya’s pragmatism in listening to industries to achieve balanced outcomes, despite it wanting to try populist public policies.

However, Yeah said decisions by Putrajaya which involve “sizeable changes” to industry costs and pricing need to be deliberated more thoroughly.

“In particular, the ability of industries and firms to absorb rising costs, although difficult to ascertain accurately, will need to be factored into the decision-making process,” he said.