M'SIA'S FUEL PRICE DOWN, BUT GOODS PRICE STILL UP

By Melati Mohd Ariff
KUALA LUMPUR, Oct 20 (Bernama) -- More smiles came from motorists on
last Oct 15, when the government slashed the pump price of gasoline.

This was made possible when the crude petroleum price plummeted to
below
US$80 a barrel.

The drop of 10-20 sen for the price of fuel at the pump was the third in
three months. The government had reduced the price for 8-22 sen on Aug 23 and a
further 10 sen on Sept 24.

The pump price of petrol per litre now is RM2.30 (RON97) and RM2.20
(RON92) while that for diesel is RM2.20 a litre.

Obviously the public is expecting a similar drop in the price of consumer
goods that had jumped when the government increased the pump price of fuel last
June 4.

CALL FOR TRADERS TO FOLLOW SUIT

Prime Minister Abdullah Ahmad Badawi has urged traders to take
the initiative by reducing price of consumer goods rather than waiting for
enforcement by the authorities.

Abdullah said in the wake of the fuel price reduction, the traders have the
social obligation to reciprocate the move by also lowering the goods' price.
Consumers' grouses on the high price of goods have snowballed particularly
during the last Ramadan.

However even after the Aidilfitri, price of daily essentials remain
high especially in rural areas and small towns.

Thus, many are not really happy with the latest reduction of fuel price as
they are still reeling from the impact of the high cost of living due to the
price consumer goods still hovering high.

Some even sardonically said that it is 'too late' and the traders would
never be willing to bend backwards and reduce the price.

FACTORS

However some argued that the hike in petrol price was not the sole factor
that had pushed up the price of other goods.

In early 2008, the world experienced a food crisis where drastic shortage
of commodities like wheat flour, sugar, corn, soya bean and rice
occurred.

Chief executive for the Federation of Malaysian Consumers Associations
(Fomca) Mohd Yusof Abdul Rahman had this to say:

"Most of the raw materials for the country's food production is imported.
Hence, the hike in the price of these commodities would have a significant
impact on the cost of food production.

"That is why the price of some goods had increased even before the June 4
jump of fuel price", he told Bernama.

He said some fresh items like fish, meat, chicken and vegetables did not
really follow the fuel price fluctuation.

"Apart from transportation costs, price increase is also due to factors
like the supply. That is why the price of fresh produce fluctuates", he
said.

The same applies for cooked food like nasi lemak (rice steamed with coconut
milk served with with cucumber slices, small dried anchovies, roasted peanuts,
stir fried water convolvulus, hard boiled egg, pickled vegetables and hot spicy
sauce, mixed rice and local delicacies. When the price had moved up, it would
never go down, he said.

WITHIN CONTROL

For regulars at the Pasar Tani (farmers' market), they might find that the
price of daily essentials is still within control as compared to that at the wet
market.

The reason is that the Federal Agriculture Marketing Authority (Fama)
ensures Pasar Tani traders adhere to the guidelines issued on the price
list.

"At each Pasar Tani, Fama displays the price list for selected items at the
agency's secretariat counter, as a guideline for consumers and traders," said
the Senior Director for Fama's Entrepreneur Development and Wholesale Division,
Abdul Wahid Mat Razi.

He said Pasar Tani traders are required to display the price tag of their
goods and they are bound by the market's trading regulations.

As of Sept 30, 2008, there are 294 farmers' markets nationwide, recording
RM285.75 million in turnover during the first nine months of the year.

Meanwhile, secretary for the Kuala Lumpur Vegetable Wholesalers Association
Low Teik Kim told Bernama that overall, the price of greens is still within
control.

"There is a slight increase in price for cucumber, long beans and red
chili. This happens at the weekend as many Muslims are holding their open
house," he said when contacted.

Low said cucumber has to be imported from Thailand to meet demand and
control its price.

As for the red chili, he said there was a slight increase in price due to
the weather and supply factors and also because the association had stopped
importing the item from China and was depending on the local supply.

Low advised consumers to exercise their options when buying vegetables.
"If people stop buying, then the price would automatically fall", he
said.

PRICE WATCH

For the manufacturers, their usual excuse to increase price is the high
operating and transportation costs. When a hike in price occurs, a reduction
later is unlikely.

"The recommended price is among the reason. Supply of goods is based on the
contract price and transportation cost agreed," said Mohd Yusof.

He said this happened as there is no price watch system in the
country.

Mohd Yusof said the only price watch system available is that for the
price-controlled goods under the Ministry of Domestic Trade and Consumer
Affairs.
"
Under the Price Control Act (1946), traders are required to display price
tags. Hence even if the price is high, as long as the traders show the price
tag, it is not an offence," he said.

FOMCA'S CALL

Fomca, for so long, has been calling for the setting up of a commission
responsible for the watch over the price of goods.

Mohd Yusof said the federation has also urged the government to enact the
Fair Trade Act as a price-regulatory mechanism.

He said at present, the ministry holds negotiations with producers of goods
not within its control in order to control price.

Thus, the government has to provide incentives for the producers to keep
the price down.

"At times, the negotiations were successful and on other occasions, failed.
There were times when the price was jacked up without the knowledge of the
government and consumers, particularly for the daily essentials or that bought
once a year like furniture or electrical appliances," he said.

He also said the recent drop of petrol and diesel price is not that
significant when compared against the immense 78 sen jump last June 4.

DECEIVED?

The issue where consumers are confused or deceived over the price of a
certain product is nothing new.

Mohd Yusof said this usually happened over products in new packaging canned
and infant formula milk products.

Even with the same amount or quantity, the new pack usually exhibits a
higher price.

"Usually when a new pack is introduced, the producer would also provide a
gift but the price of this new pack is higher.

"In this case, the consumers are deceived with the presence of a gift.
Later, the gift is withdrawn but the price stays as the consumers are made to be
familiar with this new price", he said.

SMIs

The price hike of raw materials is a major cause of concern for
entrepreneurs of the small and medium-scale industries (SMIs).

According to the deputy president of the Malaysian Bumiputera Manufacturers
and Industrial Services Association Mej (Rtd) Abdul Rahman Ibrahim, the SMI
entrepreneurs are being plagued by fluctuating price of raw materials.

This situation had placed the SMI entrepreneurs in a tight as well as
uncertain situation.

"Uncertainty in the supply of raw materials. The price fluctuates without
warning and makes it difficult for manufacturers to fix the price," he
said.

Abdul Rahman said this is further compounded when the larger corporations
offer no assistance to the smaller companies.

These corporations did not wish to take risks and were not committed to
ensure consistent supply of raw materials as they might not be able to reap
higher returns, Abdul Rahman told Bernama.

He said the association calls for the government to re-establish fund to
revive ailing entrepreneurs (TPU), that was created during the 197 economic
downturn to assist Bumiputera businessmen. (Bumiputera means son of the earth)

He also urged the government to find ways to alleviate the burden faced by
the people during the current economic situation.

-- BERNAMA