Reduce food prices and empower consumers to tackle cost of living

The government needs to undertake programmes and policies to bring down costs while consumers need to better manage their consumption and finances in this challenging economic environment.

COMMENT

By Paul Selva Raj

Fomca fully supports the concrete actions of the domestic trade and consumer affairs ministry to address the pressing cost of living issues being faced by consumers, especially low- and middle-income consumers.

Firstly, a full market review of the food supply chain needs to be undertaken. The analysis would indicate the extent of monopolistic behaviour, either through local players in the local food supply chain or the approved permits systems for imported foods.

Next, the government should use the full provisions of the Competition Act 2010 to take stern action against traders or groups of traders in the supply chain practising any form of monopolistic behaviour to manipulate and overcharge consumers to make excessive profits.

Similarly, all approved permits for imported foods need to be eliminated to promote free trade that will ensure lower prices, higher quality and more choices for consumers. The ministry reported that 297 companies were holding APs for importing food items. It is time to eliminate this practice once and for all.

Next, the Price Control and Anti-Profiteering Act 2010 needs to be strictly enforced to ensure that all forms of price manipulation and overcharging of consumers to make excessive profits is eliminated. Traders certainly have the right to “normal” profits; however, making excessive profits on essential foods will result in great suffering especially to low-income consumers.

The ministry can also further examine and strengthen the pasar malam/pagi mechanism to facilitate the direct movement of food from farmer to consumer. By eliminating the middle-men and their exploitative practices, farmers benefit from higher prices and consumers benefit through fresher goods and lower prices.

Malaysia also needs to take concrete steps to increase food production in order to be more self-sufficient. Malaysia’s food import bill has been steadily increasing, from RM26.3 billion in 2009 to RM45.4 billion in 2015. Previously, there was an excessive focus on cash crops such as oil palm and rubber. Food production is often neglected. Thus, Malaysia is only self-sufficient in chicken, fish, eggs and pork. All other essential foods are imported.

Animal feed is also heavily imported, affecting the price of the sold farm animals. There needs to be serious attempts to ensure food availability and food affordability. The government needs to re-emphasise the production of food in Malaysia to bring down the cost of living.

The government should also focus on consumer education to empower consumers to change their attitude, skills and knowledge to be more prudent consumers. Focus should also be on financial education to empower consumers to better manage their consumption, savings and credit.

Addressing the cost of living is the responsibility of both the government and the consumers. The government needs to undertake programmes and policies to bring down costs while consumers need to better manage their consumption and finances in this challenging economic environment.

Paul Selva Raj is CEO of Fomca. -FMT