Businesses call for end of anti-profiteering mechanism, consumers at losing end

KUALA LUMPUR: "The total is RM51. The "teh ais" is RM6, orange juice is RM13, curry mee is RM17 and plain fried rice is RM15".
What a shock! How could it cost so much to dine in a regular, non air-conditioned restaurant?
"This is profiteering!" yelled an indignant customer, upset at the unreasonably hefty bill.
It was a scene from an anti-profiteering campaign clip by the Ministry of Domestic Trade, Co-operatives and Consumerism (KPDNKK).
Sadly, what was portrayed by the advertisement is the reality for many Malaysians today.
In a time where regular folks are trying their hardest to survive the rising costs of living, having to face unregulated spikes in the prices of foods and services is like adding insult to injury.
It was because of this that consumers welcomed with open arms the government's move to introduce the Price Control and Anti Profiteering Act 2011, five years ago.
The act has helped put a rein on many greedy and unscrupulous traders, especially those who take advantage and charge exorbitantly during the festive seasons.
Therefore, many would be shocked and dismayed to find that the government is considering abolishing the act after grouses from among the business community.
"Section 14(2) of the Act defines profiteering as making unreasonably high profit. The act was amended to replace the Price Control Act 1946 with the addition on profiteering.
"It came into effect on April 1, 2011 with the aim of ensuring that traders do not hike up the price of goods indiscriminately and profiteer," said Dr Afida Mastura Muhammad Arif to Bernama.
The senior lecturer of consumer law at Universiti Putra Malaysia (UPM) said that the act was essential in protecting the interests of consumers and from being burdened by exorbitant costs of goods.
Before the amendment was made, there was not one regulation that could be applied for traders who profiteered.
The anti-profiteering addendum therefore made it possible action to be taken upon unscrupulous traders or service providers as it applies to all goods and services.
Consumers have become savvier of their rights under this act particularly after the Goods and Services Tax (GST) was implemented on April 1, last year.
Why abolish it?
The implementation of the act has shown to traders that they could not simply spike the prices of goods without repercussions.
In Kelantan, 24 chicken sellers will be facing the Kota Baru Sessions Court on Sept 12 for profiteering during the recent festive season of Hari Raya Aidilfitri.
This is only one of the many cases of profiteering traders that have been brought to justice as a result of KPDNKK monitoring and public complaints, indicating that the act is not only useful but potent as well.
It is therefore understandable that many would object to the abolishment the Act.
However, The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) is not one of them.
The ACCCIM has claimed that the act is not investment-friendly and deprives business freedom.
In a meeting with Prime Minister Datuk Seri Najib Abdul Razak in June, ACCCIM has asked for the Act to be repealed.
However, it told Bernama that it did not ask for the entire Act to be abolished.
"We would like to state that ACCCIM did not ask for the Act to be abolished.
"ACCCIM opines that Price Control is still needed for the sake of consumer interest. What we suggested was for the government to consider abolishing the anti-profiteering mechanism after its expiry, as it has already served its purpose, said ACCCIM Deputy Secretary-General II, Michael Chai.
Anti-profiteering mechanism
The Act in question has created a mechanism that determines excessive profit and it is this provision that has come into question.
Michael said the mechanism and formula that determined excessive profits were too complicated to be understood and thus made business difficult.
"Businesses need to keep a record of operating costs up to the level of stock keeping units. Such guidelines are impractical and causes problems especially now, when traders are burdened by an erratic economy.
"The function of a free market needs to be retained in any economy," he said.
Under the Price Control and Anti-Profiteering (Mechanism to Determine Unreasonably High Profit) (Net Profit Margin) (Amendment) Regulations 2014, traders are now allowed to increase the margin of their net profit for any goods or services for 18 months from Jan 2, 2015 to June 30, 2016. It was then extended to Dec 31, 2016.
Confused
Commenting on the issue, the Deputy President of the Federation of Malaysian Consumers Associations (Fomca) Mohd Yusof Abdul Rahman said ACCCIM seemed to be confused as to the reason amended the Act to add the anti-profiteering element.
"We believed that ACCCIM was under the impression that the mechanism would only be in place for 18 months and now, until Dec 31, 2016. But what we were told is that it would be indefinitely.
"The mechanism is aimed at preventing traders from using GST as an excuse to drastically raise prices. It is used to determine profiteering activities and the rate of net profit margin increase in goods and services during the initial period after the GST was introduced (the first 18 months and now the extension to Dec 31).
"After the period, the mechanism would still be present. It is only that the formula that determines anti-profiteering that would be reviewed," he explained.
Still making profits
Yusof said, the idea that the Act was stripping profits from traders was only a misconception of the business community.
"They can still raise prices if operation costs increase, but they cannot raise the net profit margin. For example, a bottle of mineral water costs RM1.10. The cost is RM1 and the net profit margin is 10 sen. It is only the RM1.00 that can be increased.
"However, they must be able to explain the increase to KPDNKK if they are investigated upon customer complaints. They are given seven days from the period a notice is served.
"This is what upsets them. To them, business is about market. This is why Fomca is holding its ground that the mechanism should continue to be in place to protect the consumers.
"Things would definitely go out of hand once the mechanism is abolished. Even now, so many of them have boldly flouted the Act," he said.
The last word
KPDNKK is now reviewing and researching new mechanisms that are favourable to both traders and consumers.
The ministry will continue meeting up with consumer associations, traders and members of the public before coming to a decision on the matter by the year-end.
It is hoped that whatever decision the ministry comes to will take into account the interests of consumers.
It would be foolish to assume that traders would not jack up the prices of goods as they wish if the mechanism was abolished. In fact, the statement "the mechanism has served its purpose" and did not to be extended made little sense, to say the least.
Are they saying that the dishonest among the business community have learned the error of their ways and would never again charge unreasonably high?
Many consumers today can attest that that simply is not the case. In fact, they will continue to be at the mercy of greedy businesses unless the government steps in and put a rein on such practices. — Bernama