KUALA LUMPUR: The Federation of Malaysian Manufacturers (FMM) has opposed the government’s proposal to replace the existing Price Control and Anti-Profiteering Act 2011 with a new one as prices of goods and services should be left to market forces.
In fact, the government should follow the steps of totally disbanding the net profit margin mechanism which was practiced in the more developed countries following the goods and services tax (GST) introduction when inflation eased, the association said in a statement yesterday.
“We recognise and support the need to control pricing of some essential items which affect the lower income group but a regulation to control pricing of all products indefinitely is contrary to free market practice and will adversely affect the sentiment of businesses and investors.
“No other country has in place regulations that discourage fair business competition to be enforced continuously without an end date,” it said.
FMM said the proposed new regulation requires a set mark-up in percentage to be maintained for a duration of a financial/calendar year for all products.
“This single mechanism to control the profit which is applied to all products and to all different industries with different costing and pricing strategies is not only unrealistic but time-consuming and costly for industries and regulators to implement. In fact, it may even be impossible to implement efficiently.
“The new regulation would also discourage innovation and efforts to increase productivity and cost efficiency as companies would be forced to maintain or reduce prices in order to maintain the percentage mark-up,” it said.
FMM said it viewed that other than control on essential items, any new regulations to fix profits should be removed and for market forces to be allowed to prevail in the determination of prices of goods and services.
“It is important for the government instead to encourage competition, remove monopolistic situations and reinforce the existing laws including the Competition Act to curb profiteering,” it said.
FMM represents the views and interests of over 2,600 manufacturing and manufacturing services companies in Malaysia.
Last week, the Domestic Trade, Cooperatives and Consumerism minister Datuk Seri Hamzah Zainuddin was quoted by a Bernama report as saying the government is considering improving the Price Control and Anti-Profiteering Act 2011 following a proposal for its abolition on Dec 31, 2016 as it is allegedly 'unfriendly to investors'.