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Concern over food, housing, transport and healthcare
Published on: Sunday, April 29, 2018

By Datuk Dr Paul Selva Raj

THE Federation of Malaysian Consumers Associations (Fomca) fully supports the establishment of the National Task Force on Cost of Living and considers it the way forward in addressing the cost of living issues faced by Malaysian consumers.

In almost every study undertaken among Malaysian consumers, the number one concern is cost of living.

Thus, a mechanism at the highest level of government to address this is crucial.

The approach is heavily dependent on two key factors: spending patterns of consumers and the ability of government to influence the market through the various laws and enforcement, policies and programmes.

When people talk about cost of living, they often focus on increase in food prices, but this is not enough.

Cost of living also encompasses housing, transport, healthcare and childcare, and is influenced by the income of consumers.

First, looking at food price increases, the strongest impact would be on the poor and low-income group who spend a substantial percentage of their income on this.

While food prices are not directly regulated by the Government, there is much that can be done to lower prices, especially through ensuring that there is free market competition at every step of the food supply chain.

Currently, there are various forms of monopolistic behaviour, such as approved permits, price collusion, price fixing and supply controls which distort the market price. It is suggested that if all monopolistic practices along the entire are food supply chain are removed, price of raw foods and with that price of cooked food would fall substantially. Fomca urges the Competition Commission to undertake a study and act against the companies or groups that are distorting the price of food to the disadvantage and suffering of consumers.

Secondly, price of houses is becoming simply unaffordable. The action of developers to build overpriced houses and then pressure banks to release loans to those who may not have sufficient income to service their mortgage payments is simply unacceptable.

It is clear from studies by Bank Negara Malaysia as well as the Khazanah Research Centre that houses are being priced way above the ability of consumers to pay with the income they are earning.

The regulators need to take a tougher stance to ensure that house prices match consumers’ income.

Thirdly, transport also takes up a significant portion of household incomes.

Use of public transport constitutes a substantial saving for consumers, apart from other benefits like reducing congestion and pollution. What is needed is a more reliable and comprehensive bus system in other towns.

The fourth biggest area of concern is increasing cost of healthcare. Healthcare inflation is estimated at between 15pc and 20pc. While Malaysia does have an excellent public healthcare system, overcrowding and lack of resources result in long waits to see the medical specialists. This has often resulted in consumers opting for private healthcare which can be extremely expensive.

On one hand, the Government is under-investing in public healthcare, resulting in shortages and long waits.

On the other, about 40pc of consumers pay hospital bills from their pockets because they have no medical insurance. Malaysian consumers, especially the low and middle-income groups, are worried over their ability to cope with illnesses and medical emergencies.

And if, out of care and concern, they go or take their dependants to a private hospital, they could end up with serious financial problems. Thus, greater investment in the public healthcare system is needed, at least at the minimum percentage proposed by the World Health Organization. However, more innovative approaches may also be needed to ensure that consumers have access to affordable and quality healthcare.

Childcare cost is also increasing, be it caring for children or for their preschool, primary and secondary school, transport, clothes or other expenses. The Govern­ment needs to examine how families with children can be supported with various assistance schemes.

While the above are measures the Government needs to consider and implement through various laws, policies and programmes, consumers themselves also have a critical role to play. They need to better manage their consumption patterns and, most importantly, their finances.

The Government needs to invest in consumer and financial education to empower the people to better manage their consumption. More importantly, financial education is needed for consumers to better manage their cash, credit and savings as well as to avoid scams.

The recent announcement by Bank Negara on formulating a National Financial Education strategy to ensure that all consumers will have access to financial education is fully supported.

The formation of clusters on food, housing, transport, healthcare and education under the cost of living task force is certainly a positive way forward. Malaysian consumers have the highest expectations of this task force.

Datuk Dr Paul Selva Raj
Secretary-General, Fomca

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