KUALA LUMPUR: The move to cap the ceiling price of 5kg bottled cooking oil at RM34.70 in the peninsula has been deemed unreasonable by traders and consumer associations.
The new ceiling will be implemented on Aug 8.
Bumiputera Manufacturers and Services Industry Association of Malaysia (PPIPBM) secretary-general Ahmad Shairany Zahar said the price ceiling system would cause losses for retailers and cooking oil re-packers.
"Re-packers and retailers run the risk of selling at a loss as the stock was bought at RM36 the previous month.
"In this scenario, traders will hold onto the stock until the following month, thus creating uncertainty in the market. This will lead to hoarding," he said.
Shairany said price caps would stabilise prices in the short-term but it might not be beneficial since it could lead to risks and losses.
He said large manufacturers and refineries who enjoy uncontrolled factory pricing would always be successful and do well.
"However, this new policy will affect PPIPBM members, who are mostly small-and-medium-sized businesses in the repackaging and retailing industries.
"Consumers will benefit only when there is an open competitive market promoting more repackaged and retail products. Restrictive policies such as ceiling price and quotas will result in losses and, subsequently, closures of repacking and retail businesses," he said.
He said there must be a long-term solution to create market stability.
"If controls are to be placed, they ought to be throughout the supply chain, from upstream to downstream. The same should be implemented on palm oil factories and refineries.
"Re-packers and retailers should not be the only ones absorbing cost pressures," he said.
Consumers' Association of Penang (CAP) president Mohideen Abdul Kader said a ceiling price on cooking oil based on the average crude palm oil (CPO) price of the previous month could lead to prices that were higher than the current price if global CPO prices increased.
"It will result in a possible wide fluctuation in prices, although the prices may stabilise for a particular month.
"Hoarding is a possibility as businesses may capitalise on the anticipation of a price increase the following month," he said adding that the proposed system may not be able to stabilise cooking oil prices.
However, Federation of Malaysian Consumer Associations (Fomca) chief executive officer T. Saravanan described the ceiling price as a "timely" move by the government.
"The system will eventually help to stabilise the price at the moment and when the price is no longer a concern and more stable, the government may eliminate this system and implement a floating pricing structure.
"For now, this is a good idea and we know that after the pandemic, many people lost their jobs and have less money coming in.
"The consumer price index has been going up over the past few months, which has made it harder for people to buy things, so, hopefully the B40 groups, especially, will benefit from this system."