Call to set F&B floor price instead of imposing price control
KOTA KINABALU: The government should consider setting the floor price with minimum standard on key food and beverage (F&B) items in order to ensure that customers are getting fair value for their money instead of imposing price control.
Yap Cheen Boon, from Santola Cafe, said, floor price with minimum standard refers to standard basic conditions on an even playing field to ensure customers are assured of minimum standard of food and services for the basic price paid.
He said the state government has called for a meeting with coffee shops or kopitiam representatives to propose price control on certain F&B items for the welfare of the people and to mitigate profiteering.
“Whilst this intention is noble, it has not been properly thought through nor inclusive enough to have included relevant stakeholders. For example, even though this measure does not cover high end or premium restaurant outlets, their viewpoints should have been considered too and not rushed for the sake of publicity,” he said.
Yap said, typical F&B costs could be broken down into raw ingredients, fixed operating costs and variable operating costs, which vary based on the products and services offered.
For instance, he said, some kopitiams use low grade KopiO powder, while others may use higher grade with more premium coffee content that cost more. Additionally, he pointed out, the serving volume and the amount of powder used to brew a cup of coffee would affect the cost too.
“With such variances on ingredients’ quality, serving volume and amount of powder used, would it be feasible to set a ceiling price for the Kopi-O without stipulating a common standard?” he asked.
Meanwhile, Yap said, the operating costs would depend on whether the kopitiam operators provide food and lodging over and above paying minimum wages to workers, and cleaning cutlery and tissue papers after customers.
“These would incur higher operating costs than other kopitiams that hire illegals with no medical checkup and no minimum wage payout.
“The same cost variances occur for some kopitiams that choose to open 24 hours, thus incurring higher staff and electricity costs, as well as those that operate at prime locations thereby paying high rents.
“How would kopitiam price control be able to accommodate these myriad factors?” Yap pondered.
He went on to say that researchers abroad have indicated that any form of price ceiling measure (price control) would invariably stifle competition, prevent product or service improvements, with the end result of consumers having access to inferior products or services in the long run.
For example, he said, Kopitiam A, who has been using larger glasses, more premium grade powder to serve thick flavoursome Kopi-O to customers against counterpart Kopitiam B who use only illegals and cheap ingredients, would be de-motivated to do so in the long run if the ceiling price has been set.
To tackle incidences of profiteering in kopitiams in both urban and rural areas, Yap suggested that the government consider addressing the issue from the perspective of whether customers were getting fair value for the money.
“With a minimum standard on a basic price, competition is not stifled. More can be offered, to promote higher prices as befits the free market principle. Improvements will occur like regular clockwork,” he explained.
To implement the floor price with minimum standard, Yap said, the playing field must be even by enforcing that all kopitiams comply with the rules and regulations for the benefit of consumers.
This includes ensuring premises are hygienic with toilet facility, workers to undergo regular medical checkup and issued with Food Service certificates, access to clean cutlery and tissue paper and for businesses to pay minimum wages to workers and comply to all licensing requirements.
Next will be the stipulation of the minimum standard for a glass for Kopi-O, for example, in terms of its minimum serving capacity, minimum serving portion and minimum portion of sugar, condensed milk or evaporated milk, he said.
“There is argument that ceiling price can be set with product standard too, like stipulating that Kopi-O made with the above listed criteria cannot be more than RM2.00 per glass.”