The Malaysian government is probably the biggest control freak in this region. From ban on peaceful demonstration to importation of cars and to price control on what it termed as controlled items, rice, sugar, flour, cooking oil and many more that fall into the category of essential items, the government has imposed restriction either in the form of quota, price control or monopoly.It defies economic logic and the law of supply and demand.
Market can only be at economic equilibrium when supply can meet demand and prices are favourable for both sellers and buyers.When demand outstripped supply an ugly situation called dearth of supply or shortage occurs.
In view of the shortage of cooking oil, Domestic Trade and Consumer Affairs Minister, DatukShafie Apdal announced that starting from next week each customer will only be able to purchase a maximum of 5 kg of oil at any one time. He blames smuggling to neighbouring countries as the cause of the shortage. Was that a fact or just another attempt to hoodwink the people from the real problem. How come there is a sudden surge in smuggling activities of cooking oil? To which country are the oil smuggled to ?
From talking to a few retailers, I was told the shortage was due to government refusal to allow oil producers to increase prices, resulting in them cutting down on production to cut losses as the cost of raw palm oil they purchase to process into edible oil has gone up. Is it fair to force private manufacturers to subsidise instead of the government taking the responsibility.If government is not prepared to subsidise than it should be left to market forces to find its own price level. The story from the retailers seem more plausible than the one given by the minister.
It's absurd and impractical to impose a limit on purchase per costumer when you don't have the mechanism to police and control the effectiveness of the ruling.Can you stop a consumer from going to 10 shops in a day to buy the minimum 5 kg he is allowed to purchase? It's simple logic that the exercise is abhorrent and downright impractical but yet the minister made the announcement in spite of knowing the futility of such an ill-conceived idea.
A number of popular and better grade cooking oil have disappeared from the shelves of supermarkets and grocery shops.The situation is going to get worse before it gets better.
So, brace yourself for another price hike, not only for fuel oil but also edible oil and a whole spectrum of your daily necessities.
The government claimed a growth rate of 6% in 2007. With prices of crude snowballing and the consequential price escalation in all sectors of the economy, the year 2008 maybe a gathering gloom.
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