NST Leader: Taming prices

Cost of living or cabinet first? An argument can be made for either but in terms of urgency let's settle for the former. How urgent? Very, we submit.

As this Leader went to press, a 500g tub of yogurt is being retailed at RM6.90. Two weeks ago, it was sold for RM5.90. RM1 hike in 14 days? This isn't supply and demand economics at play in the market.

It is market manipulation by price-gougers and profiteering monopolists, as studies of the Federation of Malaysian Consumers Associations (Fomca) and the Malaysia Competition Commission (MyCC) have pointed out. More on this later.

If Prime Minister Datuk Seri Anwar Ibrahim's meeting with the National Action Council on Cost of Living (Naccol) is anything to go by, he appears to be having targeted subsidies as a cure in mind.

His and Naccol's challenge will be not only to sort out the "what" which is causing the rise and rise of prices but also the "how" of the cure. Begin with the "what".

MyCC's 2019 market review report was damning: one of the key reasons for high food prices was distortion and manipulation in the supply chain.

Fomca's letter to this newspaper on Jan 12 gave an inkling of the kind of manipulation at work. Consumers were being charged six times more for 1kg of ikan kembong at the market than what the fisherman was paid for the catch.

Cabbage, too, had a similar dismal story. RM1.60 paid at the farm became RM3.90 at the market, an increase of 143 per cent. MyCC also blames the abuse of approved permits (APs). The time has come for the government to put in place a transparent system in issuing APs.

Issuing APs directly to retailers is the right way to begin. Now that the MyCC has identified the price manipulators, it is time for the government to act against them. Not that Malaysia hasn't any laws to act against the manipulators.

The Competition Act 2010 and the Price Control and Anti-Profiteering Act 2011 are two places to start. A government that is serious about lowering the prices of goods will do nothing less. Now for the "how".

Anwar wants targeted subsidies, a noble desire given the structural economic problem Malaysia has inherited. But Naccol would have a mountain to climb to come out with a workable non-discriminatory subsidy system in two weeks.

We haven't had a reliable database to implement targeted subsidies for years. To expect one in two weeks is, well, unrealistic. Some economists think that cash transfers are a better option. Again, a reliable database would be an issue.

The PM also needs to take a long view on the subsidies. This year alone subsidies cost the government nearly RM80 billion.

Some serious thinking must be done now to be able bid them adieu, or to most of them, at some stage in the future. Here are two ideas for the PM to consider.

One, put in place measures that stop all forms of public revenue leakage. Start with no fox in charge of the hen house.

Two, make it easy for Malaysians of all walks of life to be economically independent. Providing subsidies is like giving a man a fish; you just feed him for the day. Making him economically independent is teaching him how to fish; you feed him for a lifetime.

Most Popular
Related Article
Says Stories