Hypermarts told not to cut prices of subsidised items

New Straits Times, 2009/08/18

KUALA LUMPUR: Retailers have been instructed against lowering the prices of four subsidised products to protect smaller businesses.

Sugar, bread, all-purpose flour and cooking oil are not allowed to be sold below their fixed price from Aug 1, the Domestic Trade, Co-operative and Consumerism Ministry said in a recent circular.

Typically, hypermarkets and other big retailers have been holding promotions where they sell these items below the fixed price to woo more shoppers.

A copy of the circular obtained by New Straits Times stated that retailers were not allowed to advertise subsidised control items and had to stick to the price list.

The ministry's secretary-general, Datuk Mohd Zain Mohd Dom, when contacted, said the action was taken to help small retailers by creating a level playing field for them to compete with larger rivals.

He said hypermarkets were buying in bulk and were willing to sell at a loss. This had resulted in smaller retailers not being able to make money on these items.

This year, the government will spend RM1.91 billion to subsidise the four products -- much higher than last year, as sugar was included as a subsidised product this year at a cost of RM720 million to the government.

An industry executive said the move to stop anyone selling below the listed price was to suppress demand, especially since several festival celebrations were coming.

Any additional demand would involve the government having to fork out more money to subsidise the items, he said.

However, if this was the case, the directive would not work because the four items are basic goods and demand for them stays the same whether the price goes up or down, said chief economist at RAM Holdings Bhd Dr Yeah Kim Leng.

Bank Islam economist Azrul Azwar Ahmad Tajudin said the government move was puzzling.

The generosity of retailers and wholesalers in selling these controlled items below cost would go a long way to relieve the people's burden, he said.

Enough sugar in hypermarkets

STAR, Tuesday August 18, 2009

Reports by YENG AI CHUN, IVAN HO, JOSHUA FOONG, R.K. SHYAMALA and AUSTIN CAMOENS

PETALING JAYA: Consumers are heading for the hypermarkets and supermarkets to get their supply of sugar as most sundry shops and convenience stores are running low on stock.

Most major hypermarkets in the country were sufficiently stocked with the commodity for the festive season.

A spokesperson for AEON Co (M) Bhd, which manages the Jaya Jusco supermarkets and departmental stores, said the company did not have a shortage in sugar supply and had enough stock at all stores.

“We have limited the purchase of sugar to 2kg per customer to be fair to everyone. This is to ensure that supply will reach even the small households,” she said when contacted yesterday.

No laughing matter: Shopkeeper Wan Salleh Wan Jusoh standing next to a sign saying there has been no sugar for one week at his shop near Taman Nakhoda in Kuala Terengganu.

A Carrefour Malaysia Sdn Bhd spokesperson said although there had been shortages in some of its outlets, the hypermarket chain had enough supply.

“We stock up our shelves every day and we urge consumers not to panic-buy because there is enough supply for everyone,” she said, adding that each family was limited to purchase 3kg of sugar.

Housewife Agnes Chee, 63, from Taman Tun Dr Ismail, complained that sugar was unavailable at the sundry shops in her neighbourhood.

“This is why I am at a hypermarket today,” she said.

Heng Keok Poh, 48, who owns a biscuit business here, said he found the limitation hypermarkets and shops imposed on the purchase of sugar annoying.

“As I am limited to only four packets of sugar, I had to bring my wife along to buy more sugar, and have to make frequent visits to the hypermarket,” he added.

Shopkeeper A. Syed Farook, 47, said he had not been selling sugar for the past 10 days.

“When I contacted the suppliers, they claimed that they had run out of stock and were unsure when it would be available,” he said.

In Klang, a grocery shop owner who only wanted to be known as Raja said he had been limiting every customer to 1kg of sugar.

He added that his customers had scolded him and vented their frustrations on him for the shortage.

In Johor, state Tourism, Domestic Trade and Consumer Affairs Committee chairman Hoo Seong Chang said there was sufficient supply in the state as it received about 8,000 tonnes of sugar monthly.

“There are 38 wholesalers here who receive sugar directly from the Central Sugar Refinery in Shah Alam,” he told newsmen after launching a price-listing campaign at a hypermarket in Taman Tampoi Indah yesterday.

He added that 170 officers from the Domestic Trade, Cooperatives and Consumerism Ministry would be working closely with Customs officers at all entry points to check sugar smuggling.

In Sabah, Bernama quoted state Consumer Affairs and Community Development Minister Datuk Azizah Mohd Dun as saying that the shortage in the state would be alleviated with the arrival of 300 tonnes from the peninsula soon.

Refineries’ action may have caused shortage

STAR, Tuesday August 18, 2009

PETALING JAYA: The current sugar shortage situation may have been caused by refineries cutting back production after over-selling the commodity in the first six months of this year, according to the Domestic Trade, Cooperatives and Consumerism Ministry.

The ministry’s secretary-general Datuk Mohd Zain Mohd Dom said the four sugar refineries in the country could have slowed down on their production last month to cut losses as they had surpassed their subsidy quota.

Mohd Zain explained that the Government had agreed to subsidise a total of 100,000 metric tonnes of sugar sold per month by the refineries, amounting to 1.2 million metric tonnes of sugar for this year.

“They had over-produced and sold 70,000 metric tonnes in the first half of the year, surpassing the amount approved for this year’s subsidy.

“In order to cut losses, they may have cut back on production and thus created a gap in the supply chain,” he said when contacted by The Star yesterday.

However, the ministry met the sugar refineries last month. “We have instructed them to increase the supply by 20% this month and 10% in September to meet the demand for the festive season,” he said.

One of the refineries, when contacted, admitted that there was an over-selling of sugar in the first six months of this year.

“We only respond to the market supply. Nevertheless, we did not cut down on supply. We are responsible people and we have been working together to overcome the shortage of sugar,” a spokesman of the refinery who declined to be identified said.

Mohd Zain attributed other factors such as hoarding, smuggling and panic-buying among consumers for the shortage.

“There is speculation that the Government would increase the price of sugar, but it is not true. People are using the rumours to stock up and make a quick profit.

“The public should not believe such rumours and panic-buy. They should also report to the ministry about those who hoard or smuggle sugar,” he said, adding that ministry had acted against the culprits.

He cited cases where two wholesalers who were caught hoarding sugar and another in Perak who was caught selling sugar at a blackmarket price of RM1.80 per kg as opposed to the approved price of RM1.45 per kg.

“Last week, the customs stopped three cars for smuggling sugar in 10 minutes. Can you imagine how much sugar is being smuggled out in a day?”, he asked.

Government to complete buy-back of Wang Tak’s shares in Bernas soon

SUNGAI PETANI, August 1 — The government is expected to complete the buy-back of Wang Tak Co Ltd’s 31.26 per cent stake in Padiberas Nasional Bhd’s (Bernas) soon.

Agriculture and Agro-based Industries Minister, Datuk Noh Omar, said the process to buy back the shares was expected to be completed within two or three months.

“Negotiations to buy back the shares, which were in final stage, started last year after the government was aware of the company’s stake.

“Wang Tak agrees to sell its interest to a Bumiputera company,” he told a media briefing after chairing Umno Merbok’s branch meeting here today.

Noh said this when asked to comment on concerns raised by several parties on the major equity ownership by a foreign company in the country’s national rice supplier company.

“The rakyat need not worry because the government is aware of the stake. The government has the ‘golden share’, giving it the absolute power to decide on the direction of Bernas.

“This means any action by Bernas will need the approval of the government before it is undertaken,” he said.

He said the Padi and Rice Control Act did not allow non-citizens to be a member of Bernas board of directors.

Noh, however, declined to name the company which was given the right to buy back the shares from Wang Tak.

On the proposal to import rice from Sulawesi, Indonesia, Noh said the government hoped it would be realised after discussions with governor of Wilayah Gorontalo, Fadel Muhammad and governor of South Sulawesi, Pak Asrol di Makassar, last Thursday.

“We discussed the purchase of rice, corn and livestock and they hope the deal will be sealed. However, Indonesian President, Susilo Bambang Yudhoyono, has asked for a postponement because of El-Nino.

He said Sulawesi, which has eight planting seasons a year, has over 100 million metric tons of rice for export. – Bernama