New price ceiling for face masks a costly burden for businesses
When the ceiling was RM0.80, there were no masks in the market because no one could provide masks at that cost, in light of huge demand and limited supply, causing the costs to invariably go up.
Charles Liew
KUALA LUMPUR: The change in price ceiling for three-ply surgical face masks has made it hard for businesses such as pharmacies to sell them as they will now incur a major loss.
The new ceiling price for face masks had been fixed at RM1.50 per piece effective April 1, 2020. These face masks, which are the public’s go-to as a means to curtail Covid-19 risks, were previously capped at RM2 per piece.
According to Charles Liew, managing director of SHiNE Pharmacy, it is hard to sell face masks with the price ceiling change because the concept of a price ceiling was not being properly looked at by decisionmakers in the first place.
“When the ceiling was RM0.80, there were no masks in the market because no one could provide masks at that cost, in light of huge demand and limited supply, causing the costs to invariably go up.
“With production costs increasing in China, these costs would inevitably get passed through the various parties along the distribution chain. This is also not taking into account the fact that transporation costs have also doubled, tripled and quadrupled,” he explained.
Because there was no mask in the market in Malaysia when the price was RM0.80, the Ministry of Domestic Trade and Consumer Affairs decided to investigate, with the outcome of a new price ceiling at RM2.
“Now, bear in mind that the RM2 was to allow masks to again come into the market. So, with that new ceiling, pharmacies are starting to order masks again, at costs between RM1.60 to RM1.90 - just so they could provide to the Malaysian public.
“With increased pressures, the government decided to re-look at RM2, and then due to these pressures, decided to drop the ceiling to RM1.50.
“Thus, pharmacies that relied on the RM2 ceiling – with these stocks yet to arrive – all of a sudden they can now only sell at RM1.50. Imagine importing 100,000 pieces of these masks - you automatically lose money during this tough economic climate, and during MCO when you are already losing money (from less customers).”
These did not include costs of import, shipping and retail.
Liew further believe this will cause significant strain not just on the pharmacies who now cannot release these masks, but this also puts the health system as a whole at risk because more people are exposed and at the risk of ge ing sick.
“The demand increased at the start of MCO but dwindled a er the public began to accept the fact that masks may never come – and yes, we get plenty of queries about restocking til today,” he revealed.
When asked on what can be done to remedy the situation, Liew advised the government to “let supply and demand dictate the price because we are competing with the rest of the world for limited resources.”
“For companies who made orders between the date of the RM2 announcement and the date of the RM1.50 announcement, if the government were to stick to
RM1.50, the government could deal with this on a case by case basis,” he said. “If a company could prove that a mask order was made between the above dates, then they would be allowed to sell at RM2, or even sell at cost. Any way to not lose money as a business is welcomed at this juncture, because all SMEs in Malaysia are struggling, one way or another. Losing more money could really mean livelihood hanging in the balance.”