Poor control over price control

Five-year-old Matthew had a fall a week ago which resulted in a cut on his lower lip. His doting grandparents rushed him to a private hospital where he had three stitches put in under general anaesthetic and spent a night in the hospital. The next morning, he was discharged and his grandfather got a bill for RM7,000 which he duly paid.

His sister, a qualified nurse from the UK, told him that for such cases in the UK, the stitching is usually done under local anaesthetic and the patient would be sent home after that. He wouldn’t have needed someone from the UK to tell him. If he had gone to any government hospital or a private clinic, it would have cost him RM100 at the most.

Overcharging? Was the private hospital profiteering as the eyeballs of some of them pop wide open on seeing an insurance card or a guarantee letter? Who says the charges are too high? Are there rules, laws or any piece of legislation that state the charges? Zilch.

Therefore, the announcement by Domestic Trade and Consumer Affairs Ministry that it will investigate fast-food chains KFC and McDonald's over their price hikes of their products is pure humbug.

What offence have they committed? If you have coffee at the mamak stall, it may cost you RM1 and if you head to the mamak restaurant it would be RM2. At branded coffee outlets, you’ll have to cough out RM10 or perhaps much more to be seen at the foyer of a five-star hotel sipping your coffee from a china cup.

Can you say that except for the mamak who operates the stall, the three other categories of them are profiteering? Now, let us look at the so-called issue of price increases by fast-food chains.

“We have begun investigations this morning. My officers have sought information from KFC on why they increased their prices,” Astro Awani quoted the ministry’s deputy enforcement director Iskandar Halim Sulaiman as saying.

Investigating what? Why did the chains increase prices? Well, read the law first. There are hundred and one reasons and they can be justified. For example, the price of ingredients has gone up; transportation charges have increased; wage bills have gone up (they give yearly increments and bonus to staff) and the lot.

Has the ministry ever asked Starbucks or Coffee Bean why their coffee is so expensive?

Clauses in the Price Control and Anti-Profiteering Act 2011 (among others) state:

14. (1) Any person who, in the course of trade or business, profiteers in selling or offering to sell or supplying or offering to supply any goods or services commits an offence.

(2) For the purpose of this Act, “profiteer” means making profit unreasonably high.

15.(1) The Minister shall prescribe the mechanism to determine that profit is unreasonably high and different types of mechanism may be prescribed to cater for different conditions and circumstances as the Minister deems fit.

(2) In formulating the mechanism under subsection (1), the Minister may take into consideration the following matters:

(a) any tax imposition;

(b) the supplier’s cost;

(c) supply and demand conditions;

(d) the conditions and circumstances of geographical or product market; or

(e) any other relevant matters in relation to the prices of goods or charges for services. (end italicisation)

Pompous pronouncements

Anyone of the above can be used to justify price increases. When it was implemented in April 2011, the then deputy minister Tan Lian Hoe said with the introduction of the act, action could be taken against traders who indiscriminately raised prices.

“Through this legislation, we aim to rein in irresponsible traders who engage in profiteering, especially during the festive seasons and in times of crisis,” she was then quoted as saying.

Seven years later, the authorities are still “talking” about stemming the soaring prices but has this all-conquering piece of legislation been helpful? The “talking” is continuing unabated.

Four years ago, I wrote: “Before we scream ‘profiteering’, can anyone tell us what rate of profits would be deemed fair and what would be deemed profiteering? First of all, it must be admitted that these are subjective.”

I gave the humble ais kosong (iced water) as an example and quipped: “If the minister takes all the five factors into consideration, what would be a fair price for the consumer to pay? This writer would venture to say that even 5 sen crosses the boundary on “fair profit” as the price in restaurants varies from 40 sen to 80 sen and in some pubs, it goes up to RM2.”

Coming back to KFC and McD, what can the ministry do? To put it bluntly, the answer is a big, fat NOTHING.

Can the price of the popular daun pisang meal be regulated? The basic fare – rice, three vegetables and plain curry ranges from RM5.50 to RM12.50. The add-ons vary from RM6 to RM80 in the case of big prawns. Can anyone regulate the price of the humble ikan bulus? It has now become too expensive for the average wage-earner.

Some other examples: Does opening a packet of instant noodles and pouring boiling water into it warrant a RM5 price tag? By the same token, would paying RM20,000 for an Approved Permit to import a car be profiteering? After all, the government dishes them out free of charge and no one screams “profiteering” when it is sold openly.

In the case of food and beverage outlets, as long as you have a price list prominently displayed or a menu with the prices, there’s nothing the ministry or anyone can do.

We are not in a socialist state where everything is determined by the government. It can only be done if the state buys up all the products. They can then be sold in state-run shops at fixed prices. Ours is supposed to be a thriving economy in which market forces – supply and demand – should determine the price of goods.

Enough of the pompous pronouncements to tell us that efforts are being made to control prices. What’s my beef, you may ask. The ministry does not have the will nor the teeth to chew into the exorbitant prices charged by some restaurants.

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R NADESWARAN has a hefty laugh when the ministry 'investigates' price increases. Has anyone been successfully convicted? Comments: citizen.nades22@gmail.com - Mkini