THIS issue on the rising cost of living has acquired much prominence since the new government took over about a year ago. Indeed, this subject is close to the hearts of many Malaysians now given the many development projects taking place around us impacting the purchasing power of our ringgit.
Although our inflation rates (about 2 per cent to 3 per cent) are under control, the cost of living is high for the general population, in particular the low income groups. For many of us, this apparent discrepancy is not easily understood and needs clarification once a while.
The initiative to establish a food bank by the government is laudable, reflecting efforts to think outside the box so to speak. This is good especially in this blessed month of Ramadan when one is expected to be less wasteful and more concerned with the plight of the less fortunate, the poor, the homeless and the vagabonds. The latter groups are quite visible in our midst, despite our general prosperity.
The initiative of the food bank will demand lots of voluntarism, a quality that we have to rebuild, and coordination with the food suppliers, such as the many hypermarkets, in order to execute the supply chain linkages in the shortest time possible to avoid food deterioration. This will remain a challenge to those involved and, I am sure, overtime, the efficiency of the system can be enhanced.
The high cost of living, as perceived by many, is caused by several factors. While the low currency value may have contributed to it to some extent, it is largely due to the distribution system and market structure.
In this regard, the Ministry of Domestic Trade and Consumerism, in particular, may have to spend much time to understand how our market structure works and how prevalent market practices impinge upon domestic price level. The drop in the oil prices and the government subsidy on diesel as well as the low incomes of fishermen could not explain why retail fish prices are high.
This study has to be long term in nature and a thorough analysis must be done so that the authorities fully understand the market structure and behaviour to enable them formulate public policies which are relevant and appropriate.
No one is talking about the high prize of fish now. It is a daily conversation for many housewives and husbands too. It begs the long-time question of the role of market intermediaries or the middlemen, whether they have been extracting the surplus much more than their fair share in the final prices of the merchandise. This needs scrutiny. Addressing the cost of living concern is also the duty of families and individuals. Household budgeting is their personal concerns and therefore they should do the utmost to insulate their families from the full impact of high costs of living. The role of authorities is, in this regard, limited and complementary at best.
This reminds me of the campaign to encourage the society to plant vegetables to supplement their daily “leafy” needs. Families in urban areas may need to inculcate this habit of growing own vegetables for home consumption. Certainly, we do not need another public campaign or subsidy to undertake this hobby.
Back to the issue of food bank, food wastage among us appears very real as reported in this English daily (NST). We have a society in which some sections can afford the luxury of not consuming all the ordered food on the table, hence wasteful, we also have pockets of population who hardly have enough daily meals.
Thus, this effort of establishing a food bank is a good move and all sections of the food suppliers need to cooperate with the government organisers of foodbank to ensure speedy delivery of the prepared food. In fact this effort is quite innovative.
In terms of public policy that relates to managing inflation and cost of living, Malaysia’s efforts are sometimes quite effective and quite beyond traditional measures used by the western countries. The latter often relies heavily on monetary instruments to maintain price stability. Malaysia, on the other hand has deployed direct price controls on essential goods and services especially during social festivities such as the Hari Raya and Chinese New Year.
These latter measures, while they are difficult to be defended on theoretical grounds, which have depended on supply and demand forces as well as of inflation expectations to explain price movements, they do contribute to some price stability especially during festive seasons.
In this regard, a deep understanding of the society and the contexts under which public policies are to be formulated, is an important element of policy formulation process in any country. Our price control and food bank examples illustrate this perspective.
Tan Sri Dr. Sulaiman Mahbob is Adjunct Professor at International Institute of Public Policy and Management (INPUMA), Universiti Malaya