Right move to set maximum price for 5kg bottled cooking oil, but needs monitoring - Experts

KUALA LUMPUR, Aug 2 (Bernama) -- Experts have described the government’s efforts to reduce the impact of inflation on consumers by setting the maximum sale price for the five kilogrammes (kg) bottled palm cooking oil at RM34.70 beginning Aug 8 as the right move but it needs to be monitored.

Sunway University’s economic professor Dr Yeah Kim Leng said the setting of the maximum price will ease the people’s burden, especially the B40 group who are affected by the hike in the prices of goods.

“It is also important for the government to ensure that the wholesalers and retailers are able to sustain their operations, thus selling it (product) at a controlled price will be very helpful for ensuring that the cost of living is manageable for our low-income households,” he told Bernama today.

Yeah said he also hoped that the government will focus on efforts to provide targeted subsidies to the people by giving out coupons and increasing aid amounts to help the low-income group.

Universiti Malaya (UM) economic analyst Dr Roza Hazli Zakaria said the government’s initiative pleases the consumers, however, from the economic point of view, the supply of cooking oil in the market could become limited.

"Our concern is if the supply is insufficient to meet demand because when prices are low, households are more likely to increase purchases. We are also worried that low prices will not give enough incentives for the manufacturers to continue supplying cooking oil as the sale prices cannot cover the total cost incurred.

“This is assuming that there is no inflation, smuggling activities by cartels and so on,” she added.

On the implication of setting new oil prices on a monthly basis, she did not rule out the possibility of certain parties hoarding supplies when the prices are low.

“Palm cooking oil is a durable product.  There is a possibility that consumers (who have purchasing power) buy more than they need when prices are low and resell the product at a high price, thus stricter monitoring by the government to prevent hoarding is needed,” she said.

Meanwhile, Prof Dr Mohd Nazari Ismail from UM's Faculty of Business and Economics expressed his support for the move to set cooking oil prices on a monthly basis if the effort is to prevent certain parties from making excessive profits.

“So the government has to be careful in implementing the measure.  It is a good measure if there are monopolies, cartels and so on, which affect consumers’ welfare,” he said.

Yesterday, Special Task Force on Jihad Against Inflation chairman Tan Sri Annuar Musa announced that palm cooking oil in 5kg bottles will be sold at RM34.70 beginning Aug 8, which is applicable in Peninsular Malaysia.

Annuar said the price of the cooking oil will also be set every month through announcements by the Malaysian Palm Oil Board (MPOB).

He said with the announcement, the Domestic Trade and Consumer Affairs Ministry (KPDNHEP) will be taking steps to gazette the price.

-- BERNAMA