Price increases: The new economic reality

NGOs and economic experts say price increase of goods is the new economic reality and Malaysians have no other choice but to face this.

KUALA LUMPUR: The time has come for Malaysians to accept the new global economic reality and be prepared to be more prudent in their spending and give more focus in conserving precious resources like electricity and water, and to think less about subsidies.

This is important in facing the increase in the cost of various goods and products due to the increase in global oil prices and the reduction in food supply caused by changes in global climate.

In this context, speaking to Bernama, several non-governmental organisations (NGOs) as well as economic experts echoed the statement by Deputy Prime Minister Muhyiddin Yassin on Thursday asking Malaysians to be mentally prepared to face an increase in prices on various products due to the increase in oil prices and reduction in food supply caused by changes in global climate.

Muhyiddin also said Malaysians should control their expenses and learn to increase their own food supply.

“If we do this, the public would then not be burdened when the country faces an increase in cost and inflation,” he had said.

The Federation of Malaysian Consumers Associations (Fomca) president Datuk N. Marimuthu said what was important was to educate the people on things that matter in their daily lives such as market forces, pricing system and mechanism and subsidy rationalisation.

“Basically in the last 50 years we say we can manage everything…but in the last three years we cannot manage everything. The people must be educated that we cannot run from the impact of the increase in oil prices and climate change, all of which are global phenomena,” he said.

Marimuthu said that prices were very much influenced by external factors, and urged the people to play their role in facing the tough time ahead.

Marimuthu urged the government, however, to strive to protect the poor and the poorest from the burden of price increases and ensure they are not left out of mainstream development.

The Malaysian Muslim Consumers Association (PPIM) secretary-general, Dr Maamor Osman acknowledged that it was not so easy to change people’s mentality, but urged them to reduce buying unnecessary goods so that they will have more money to buy necessary items.

Dr Maamor said people must accept the current reality — that the price increase of various products are due to factors in the global economy and that they must understand the mechanism so that the increase would not affect them too much.

People must also try to increase their purchasing capacity, and one of the ways is to enhance their skills so that they would be able to earn more.

On ways to increase their own food supply, he said, although people in urban areas are facing problems to grow vegetables and fruits, resident associations, for example, could collectively grow food products in unused and empty land, like under the power transmission lines, and share the harvest.

Centre for Environment, Technology and Development Malaysia (Cetdem) chairman Gurmit Singh K.S. said a mistake had been done in letting the subsidy mentality to build up for so long in the minds of Malaysians.

This had to be removed in stages, he said, adding that while inflation and the prices of goods must be kept under control, the public must also stop wasting resources, be they cheap or expensive, such as electricity, water and fuel.

Gurmit said the price of electricity in Malaysia is one of the cheapest in the region, resulting in many Malaysians not bothering to use it efficiently.

“Everyone from the poor to the rich is wasting electricity; they think that because it is cheap they can waste it. They must realise that this is not something to be wasted…they must learn to conserve,” said Gurmit Singh.

Using electricity more efficiently and commuting in public transports would not only benefit the public in terms of cost saving but also help in reducing the affect of climate change.

“People drive to nearby outlet just to get a copy of the newspaper. Why can’t they just walk? This will not only save fuel but also a good physical exercise.”

He stressed that Malaysians must learn to be frugal and enjoy a quality life. In this context, he urged the rich and the upper middle class, and even ministers, to set a good example.

Dr Yeah Kim Leng, the group chief economist of RAM Holdings Berhad, said businesses and consumers need to cope with the rising prices in the context of the new economic reality.

In order for businesses to absorb the cost increase, they must focus on efficiency and productivity to help offset the cost increase. As such, he foresees that the passing of the cost increase to consumers would be minimal.

“Consumers also can look for cheaper substitutes of goods and services they are buying…there are many alternatives in the market,” he said.

Consumers need to be prudent and cut on unnecessary spending, he stressed, pointing out that subsidy rationalisation is necessary to ensure the country’s economy is healthy and deficit is reduced.

- Bernama