‘Govt killing off local shops in Sabah, Sarawak’

Why is the government helping Mydin make an 'astronomical profit' by channeling RM386 million to 57 KR1M stores for Sabah and Sarawak?

KUALA LUMPUR: The allocation in Budget 2013 for 57 Kedai Rakyat 1 Malaysia (KR1M) to sell basic goods at a lower price in Sabah and Sarawak will kill off local competitors, said DAP today.

When tabling the budget on Friday, Prime Minister Najib Tun Razak said: “The government will allocate RM386 million to ensure the prices of essential goods in Sabah and Sarawak as well as in Labuan are sold at lower prices through the opening of 57 KR1M stores.”

But DAP publicity chief Tony Pua pointed out that Mydin Mohamed Holdings Bhd – the company that sets up the KR1M stores – will profit at the expense of its competitors due to the unfair price competition.

“Since the RM386 million grant or subsidy is given only to Mydin, the government is in effect killing off all of Mydin’s competitors – from big hypermarkets to small mom-and-pop shops,” Pua told reporters in the Parliament lobby.

“Mydin will have the monopolistic right to sell certain products at substantially cheaper prices than its competitors due to the exclusive RM386 million from the federal government.”

Pua said that while DAP were in complete support of any measure by the government to reduce the prices of goods and services in East Malaysia, the approach taken by the prime minister was “clearly designed to profit only Mydin”.

“We call upon the government to make available to all small retail outlets already in existence throughout Sabah and Sarawak to ensure that the maximum number of retailers and consumers will benefit from the programme to sell basic necessities at lower prices.

“There is absolutely no need for the government to sponsor its crony to open up new shops in these areas to compete unfairly and kill off local shop-owners.

“We are in fact disgusted by the fact that even in a programme ostensibly designed to lower the cost of living of the poor, the BN government has chosen a mechanism to profit its cronies at the expense of the man-on-the-street,” said Pua.

Why so much for KR1M?

Pua also questioned why the government was helping Mydin make an “astronomical profit” by channelling RM386 million to the 57 KR1M stores.

“Based on 57 proposed new outlets in Sabah and Sarawak with a budget of RM386 million, each retail shop will average a whopping cost of RM6.77 million.

“This is manifold higher than what was announced in the Budget 2012 where RM40 million was allocated to Mydin to subsidise 85 stores, where each store will average RM471,000.

“Why is there a difference of RM6.3 million for each store set up between 2012 and 2013?”

He also said if the government was sincere in using the money to bear the cost of delivering products from Peninsular Malaysia to the locals, then the same benefit should be extended to all other shops in the area.

“What’s worse is that there is no transparency or competition in the subsidies given to Mydin.”

“Malaysians will not be able to ascertain if we are getting our value for money, or whether a significant chunk of the subsidy will be siphoned off by the company,” he said.