Perhaps I was naive about KR1M, says Mydin boss

Reflecting on the failed Kedai Rakyat 1Malaysia (KR1M), Ameer Ali Mydin said he may have been naive when his popular hypermarket chain Mydin ventured into the project, which was intended to help Malaysians cope with the rising cost of living.

"I think the intention was very noble. The government has very noble intentions. We also thought naively that since we are the largest local player, we should take this initiative.

"Let's do this for the people... because at end of the day, we are Malaysians. We earn money here and Mydin was making RM50 to RM70 million a year. So, I said, let's do it as part of our corporate social responsibility (CSR).

"How much money can you lose anyway?" the hypermarket's managing director said in an interview with business radio station BFM.

Ameer stated that during the course of the KR1M project, Mydin suffered losses of more than RM100 million.

"Naively maybe, we thought we could sustain it. Unfortunately, the logistics cost behind this was just tremendous," he said.

Unlike a regular business that expands their stores from a centre, he explained, KR1M sought to reach the outskirts.

"You will be shocked at the prices of goods at somewhere like Kapit, Belaga, in Sabah, Sarawak. We send containers down there and the goods finish almost immediately.

"But we are also selling at the same prices we sell in West Malaysia for most of the items.

"The logistics cost, seriously, came to about 20 to 25 percent," he said.

Ameer said Mydin had to absorb the losses, none of which was borne by the government.

Asked about reports on taxpayers having to foot more than RM100 million for the KR1M project, Ameer said these were assets acquired by the government.

"Let me put it in perspective. Whenever you open a KR1M shop, the assets, that means the renovation, the gondola (shelving), these are paid for by the government.

"The assets are not the goods. The goods were ours, the operation cost was ours, the prices were ours, the losses were ours, the logistics cost was ours. I made over RM100 million losses.

"But be it as it may, it was a CSR for us. It was a learning experience. The government basically spent money on the assets," he said.

Ameer said while Mydin had to absorb the losses on the goods it sold at a discount, the government still retained the assets.

He stressed that at no point did the government subsidise the goods in KR1M.

Yesterday, Prime Minister Najib Abdul Razak relaunched the KR1M as KR1M 2.0 under a new business model, after Mydin withdrew from the project.- Mkini