Act cautiously in investigating price hikes at KFC, McDonald’s, govt urged

There are reports that the domestic trade and consumer affairs ministry will investigate McDonald’s and KFC about price increases at the two fast food chains.

PETALING JAYA: Putrajaya should not intervene in the issue of two fast food chains increasing their prices and allow market forces to determine supply and demand, says a chamber of commerce.

Malaysian International Chamber of Commerce and Industry (MICCI) vice-president Azrani Rustam said price increases were a normal part of any business, taking into consideration the increases in costs and inflation among others.

He said this in commenting on a report by Astro Awani that the domestic trade and consumer affairs ministry would investigate McDonald’s and KFC in the wake of public complaints about price increases at the two fast-food chains.

Azrani told FMT while they acknowledged there were laws to prohibit extreme profiteering, this should not replace a consumer’s right to make informed choices on whether to buy a product or otherwise.

“Where regulations start to intervene in the areas of non-essential, non-price controlled items, the risk is that the government would start to push pricing dynamics on other items that would affect businesses and ultimately affect the natural running of the free market economy.

“We would urge the government to act very cautiously in this instance,” he said, adding that consumers should be encouraged to exercise their right to choose.

Economist Yeah Kim Leng from Sunway University Business School, meanwhile, said the authorities were justified in stepping in whenever there were unjustifiable price increases in businesses with pricing power due to a lack of sufficient players.

“However, due to complex industry dynamics and fast-changing market conditions, it is tough for the authorities to prove that businesses are flouting hard-to-enforce rules.”

He added that if the government was seen as being too intrusive, unfair and unpredictable, it would negatively affect business sentiments.

“That is why the government should only act if there is clear or blatant abuse, or unethical business practices.”

Yeah said the government could promote greater competition and increase the number of players in the market.

Prominent businessman Ameer Ali Mydin said under the Price Control and Anti Profiteering Act, the authorities were empowered to investigate complaints of unjustifiable price hikes.

“They will usually seek an explanation from the businesses and see if the increase in prices is justified by the increase in costs,” said Ameer, who is the managing director of the Mydin chain of hypermarkets.

Ameer, who is also the vice-president of the Bumiputera Retailers Organisation, said the problem with the Price Control and Anti-Profiteering Act was that it removed the flexibility of businesses to adjust their pricing when they needed to.

“Say a pack of coffee is now RM5 while a t-shirt is RM10. Suddenly due to shortages, the price of coffee in the market goes up to RM10.

“What I would do as a businessman, is keep the price of coffee at around RM5 because more people consume the product, and to make up for the loss on two packs of coffee, I increase the price of the t-shirts to RM20.”

He added that the law made it unattractive for business to come in when more competition was a better price regulator. - FMT