Kedai Rakyat: Pulling a fast one

It appears that abusing taxpayers' money is the easy part. The difficult part is for the government to justify it once the damage is done

COMMENT

The secretary-general of the Trade, Co-operatives and Consumerism Ministry, Mohd Zain Mohd Dom, chose to respond to my letter “Who is short-changing Malaysians – BN or Pakatan?” published in FMT on Nov 11. The heading he referred to was the same as in the article on my blog.

I’m glad to have caught the attention of the ministry, which took the time to visit my humble blog and then give a response.

Obviously, the ministry feels that my writings are more significant than the press conferences Tony Pua, Nurul Izzah Anwar and Dzulkefly Ahmad give at the Parliament lobby.

For this, I am truly flattered.

Let us have a look at his “justification” of the minister Ismail Sabri Yaakob’s remarks. Ismail Sabri told reporters that products sold at Kedai Rakyat 1Malaysia (KR1M) would be “up to 50% cheaper” than similarly branded products and cannot be compared to house brands.

Such statements are common in a video store trying to get rid of unpopular DVDs. One could see a large pile of DVDs of obscure titles in the centre of the room.

There would be a sign “up to 70% off”, but the ones you would want to buy would only be 10% off.

This is certainly the impression the minister gave if we were to believe Mohd Zain.

For those that do not know, KR1M was mooted to “combat the rising costs” of living. Prime Minister Najib Tun Razak, under his “Rakyat Didahulukan” (People First) campaign, envisioned a store in which essential goods could be supplied at rates cheaper than currently found in the market.

This initiative would ease the burden of inflation and directly benefit the rakyat.

The first KR1M was opened to great fanfare at the Kelana Jaya LRT station in June this year. There are now six KR1M outlets and 22 more are slated to open in 2012.

Who operates these stores? Mydin. Was there an open tender? No. So much for Najib’s boast of economic transformation.

When the KR1M – thrift store chain – concept was announced in the first place, I honestly believed that we would be able to get a pretty good deal across these 250 items.

The ministry now admits that this is not entirely accurate, and some items are found to be more expensive than what can be found in the market. In short, they misled the public.

What discount?

When Ismail Sabri made the “50% off” comment, what was the benchmark price used to calculate the 50% reduction? If you are talking about Cold Storage, Mercato and 7-Eleven, he is probably right.

However, what percentage of the population would actually do their shopping at Cold Storage, Mercato and 7-Eleven?

Perhaps they (the ministry) used the recommended retail prices (RRP) of the goods to benchmark their discounts.

However, whenever I enter Carrefour, Tesco or Giant, there are giant signs that say “Promosi Hebat!” On this basis, is the public assured that the prices offered at KR1M are lower than such promotions?

If not, what benefit is there to shop at any KR1M when one could just head over to Tesco?

Not a house brand?

What is the definition of a “house brand”? A house brand or a generic brand is a range of products sold under a single entity, which, in this case, is Mydin. Furthermore, house brands tend to be cheaper because of the generic branding.

However, the ministry denies that KR1M products can be compared to other house brands, like Tesco and Carrefour, as they are not of the same quality.

Then why not just sell me Dettol at a cheaper price than slapping a KR1M brand on it? Is the minister unaware that generic labels are associated with lower quality products than the larger brands?

The managing director, Ameer Ali Mydin, also jumped to the defence of the products sold at the store, reaffirming that the products are of better quality.

In that case, can Ameer Ali kindly explain why the store previously sold milk which tested positive for E-Coli and also have eight items in stock which fail the standards stipulated in the Food Act 1983 and Food Regulations 1985?

If we can take Ameer Ali’s statement – “KR1M sells quality products at lower prices. It is not a dumping ground for products of lesser quality as alleged by certain quarters” – seriously, perhaps he may want to have a check on his procurement department; otherwise there would continue to be a lack of credibility.

RM40 million for refurbishment?

Normally, when we talk about renovation, the sum of RM75,000 to RM100,000 would suffice for a space which covers 2,000 sq ft.

However, when it was clarified that the RM40 million subsidy was not to subsidise the products but the cost of refurbishment, how can it be justified?

We also have contradictory figures on the number of KR1M shops in operation. In one press statement it was stated that 83 stores are in operation as of November 2011 and 25 more are in the pipeline, but the third store was opened only this August.

Another article mentioned there would be a total of 85 stores next year. A Star report in August said that 25 more will open in 2011, and a New Straits Times report dated Aug 27 said only 22 stores are to be opened this year.

To make matters worse, KR1M official store locator only indicates six stores open. So what is the actual number? I can’t help but feel that we are being taken for a ride.

I shall take the store locator to be accurate. To give them the benefit of the doubt, I shall add in the additional 25 stores for this year.

So Mydin has spent RM40 million to renovate 31 stores at a cost of RM1.3 million per store. Does anyone smell corruption here?

Mom-and-pop stores

One has to ask, what is the point of this exercise? There are so many existing supermarkets and mini-markets that could benefit from the subsidy to bring their prices down.

Setting up these stores may save consumers some money, but they also drive the average mom-and-pop stores out of business.

Why appoint Mydin to operate these stores at such an extravagant cost to the taxpayers? Why was the tender not extended to Tesco, Carrefour, Giant and 99Speedmart which already operate mini-markets?

Since the release of the Auditor-General’s Report, it is clear that this government has a lot to explain and account for.

Kudos to Mohd Zain for giving a more plausible justification than Khairy Jamaluddin’s absurd story that buying a RM10 million condo for the National Feedlot Centre (NFC) project is a sound investment.

If one ministry is willing to rebut what I had written, why can’t other ministries do the same? Can the defence ministry clarify the Skudai Seventh Brigade project or the supply of RM7.55 billion worth of armoured carriers from DRB-Hicom?

Can the Malaysian Anti-Corruption Commission (MACC) explain why it could not catch anyone else from the PKFZ scandal or why it was so keen to investigate Petronas but not Shahrizat Abdul Jalil? Can the health ministry explain how goods in KR1M could fail Malaysian standards?

It appears that stealing money from the taxpayers is the easy part. The difficult part is for the government to justify it once the damage is done.