Kept on his toes
Barely two weeks into the job, the Domestic Trade and Consumer Affairs Minister admits that managing consumers’ opinion and perception is a challenge.
DATUK Saifuddin Nasution Ismail, the Domestic Trade and Consumer Affairs (KPDNHEP) Minister is a man pulled in many directions. The first-time minister, like many of his contemporaries, is still getting used to the job, immersing himself in meeting after meeting to get to grips with the different facets of the ministry he is now in charge of.
The reformasi war horse has come a long way. He started his career in politics with Umno in 1990 and was a rising star in the youth wing. But when Datuk Seri Anwar was fired as deputy prime minister and deputy president in 1998, Saifuddin stood by him – which got him sacked from Umno too and he went on to be one of the founders of Parti Keadilan Nasional.
His struggles as a politician has seen him falling to the depths and scaling the heights in politics, where he now has immense responsibilities as a minister, who in more ways than one, is connected to people on the ground.
The public will know him as the man, who is most responsible for the cost of living. From the prices of goods they pay for food to petrol, Saifuddin’s ministry is under the microscope to ensure that living costs are brought under control.
But his responsibilities are more than just keeping tabs on the price of everyday goods and ensuring that consumer’s rights are protected, he tells Sunday Star about his new tasks.
It has been over a week since you started at the ministry. What are your immediate challenges?
Ini memang hot seat betul! (This really is a hot seat!) We need to manage the public opinion and public perception on certain things, (what to) come out as announcement. You can’t avoid this because the challenge is to come up with a proper script and narrative that is accurate. I attended a briefing on the findings about the price of goods after the abolition of the GST.
We have 1,044 officers who keep track on prices. Their job is to go out and check on the prices, they go to wet markets, supermarkets, fast food restaurants, mamak restaurants. Every day they update (the prices). They did a survey of 417 items including food items, from 1 June to 5 July at over 17,000 premises which I think that’s fairly representative. It is analysed here.
After we zero-rated the GST, there are items that have not increased in prices. However, out of the 417 items that we surveyed, there are items that are exempted from GST. So after the GST is zero-rated, there is no GST either. So my officers found that there are some prices that didn’t increase. There are items that saw a slight reduction in prices, but these are negligible. It is 0.04%. The largest drop in prices is 13%.
Out the survey of 417 items that saw a drop between 0.04%-13%, how many items actually saw a drop in price? It’s 70% of them. But if the headlines read “70% of items saw a drop in prices” that’s misleading. It’s more accurate to say “a small reduction in prices”. It didn’t drop by a large percentage, but that is the findings.
Are those findings good or bad?
The prices could drop further, it could happen. But that is the actual findings. And that triggered a few measures being taken. We took a look at the number of complaints that increased. In May, we had only 1,400 complaints. In June, they increased to 4,500. When we did an analysis, we found that 50% of complaints were on prices that didn’t change or prices that increased involving restaurants, cafeteria and food outlets.
I am reliant on the information from the officers, but I choose to go down to the ground. I chose a market in Pantai Jerejak (he is the state assemblyman). I spent about an hour there. I spoke to traders and housewives who were shopping. A trader who sold onions and dried chillies thanked me and told me he has more customers after the GST was zero-rated. He gets his supply from a wholesaler at a cheaper price and in return is able to sell his product cheaper too.
I went to a shop selling spices. The trader there said the same thing, that there are more customers. I thought that is a clear indication of the (increased) purchasing power and confidence of consumers. They are spending.
Previously, when consumers get their salary, they would (apportion) it for bill utilities, car insurance, house rental and toll money. They were very frugal. (So) if the traders can tell you that now the number of customers has increased, that is a clear indication. People now dare to spend.
KPDNHEP is usually associated with issues related to cost of living. In your opinion, is it right that the ministry alone holds that responsibility given that there are broad considerations such as currency exchange or supply and demands that are not within the jurisdiction of the ministry? Are there new measures or policies that the ministry plan to introduce to address cost of living and enhance consumer protection?
The ministry is planning to improve the Consumer Protection Act (CPA) 1999 to protect the interest and rights of consumers. The ministry is hoping to conduct a research to provide greater protection for consumers as there may be some gap which needed to be addressed to protect consumers from unscrupulous businesses.
First of all, we need to understand the definition of cost of living.
“Cost of living” can be defined as the average cost of food, clothing and other necessary or usual goods and services paid by a person or family. Cost of living not only covers prices on goods and services but is also covers other elements such as housing expenses (rental, maintenance) transportation expenses (fuel, fare) and utilities (water, electricity).
The cost of living issues in Malaysia is not only under KPDNHEP jurisdiction but involve other ministries such as Housing and Local Government (housing/ rental), Energy, Technology, Science, Climate Change and Environment (utilities) and Transport (public transport/fare).
KPDNHEP will reactivate the National Action Council on Cost of Living. This council serves as the main body to address issues and challenges regarding cost of living that affects people’s well-being. The ministry will be the main secretariat and the council will focus on cost of living issues in the various sectors. We will reactivate the council as soon as possible.
The anti-profiteering law gave the authority to your
enforcement division to take action against excessive pricing. Is this applicable to all types of goods/products including house or land? If not, why?
The Price Control and Anti Profiteering Act 2011 (PCAPA 2011) is enforced by the ministry to deal with unreasonable profiteering activities via the Price Control and Anti-Profiteering (Mechanisms to Determine Unreasonable High Profit) Regulation 2018. This regulation applies to all goods and services including home and land. However, we do not control house and land prices. The ministry leaves it to market forces.
How does your enforcement determine what constitutes profiteering or excessive pricing?
Profiteering is determined by applying the mechanism under section 15 of the PCAPA. It occurs when the profit percentage of the current year exceeds the basis profit percentage allowed during the year. The mechanism is not intended to determine or restrict businesses from making profits. Traders still have the freedom to determine the profits and prices of goods and services being sold or supplied to consumers. This legislation is a way for the government to control traders from exploiting the situation and making excessive profits.
Fuel price has always been a subject widely followed by the public. Is the present price mechanism working well or is there any plan to come out with new policies to determine the price?
The price of fuel in Malaysia is determined by the Government based on the Automatic Pricing Mechanism (APM) since April 1994. Components in the APM consist of product cost, alpha, operation cost, oil company margin and petrol station dealer’s margin.
The Government is aware that the rise in petrol and diesel prices will burden consumer’s pockets. That is why on June 7, the Government decided to maintain the price of petrol RON95 at RM2.20 per litre and the price of diesel at RM2.18 per litre, while the price of RON97 is reviewed every Thursday as this is a premium product. By maintaining the price a current levels, consumers are able to enjoy lower oil prices than actual market prices.
Another area the ministry is involved in – free trade agreement negotiations. Can you elaborate the ministry’s role vis a vis FTAs? Which are the divisions or agencies involved in FTAs or meetings at international level?
KPDNHEP is involved in international intellectual property (IP), competition and state-owned enterprises (SOEs) negotiations in multilateral forums such as the World Trade Organisation, World Intellectual Property Organisation (Wipo), Asean, Apec and UN Conference on Trade and Development. The ministry through its international section of policy and strategic planning division also leads negotiations on IP, competition and SOEs chapters in bilateral and regional free trade agreements such as Regional Comprehensive Economic Partnership (RCEP) and Comprehensive and Progressive agreement for Trans-Pacific Partnership (CPTPP).
The ministry’s positions in FTA negotiations are based on domestic laws and policies and best practise approaches along with continuous consultations with relevant government agencies that are responsible for IP and competition policies. The ministry also carried out consultations with stakeholders such as business and trade associations, GLCs and NGOs to ensure balance outcome for Malaysia in such negotiations.