Tuesday, March 2, 2021

The end of race-based business cartels?

Where the strong arm of the government has failed in ending business monopolies by certain communities, technology could succeed.

Other News

Rayuan saman fitnah NFCorp terhadap Nurul Izzah ditolak

Mahkamah memerintahkan NFCorp dan Mohamad Salleh membayar kos RM50,000.

Muhyiddin’s report card, one year on

In assessing Muhyiddin, one must take into account the twin crises that coincided with his premiership: the Covid-19 pandemic and the resulting economic fallout.

Kes baru Covid-19 kembali turun bawah 2,000

5 lagi kematian menjadikan jumlah 1,135 keseluruhannya.

New cases dip below 2,000

Five more deaths take toll to 1,135.

Pembunuhan pengasas Ambank, mahkamah kekal hukuman mati pesalah

Presiden Mahkamah Rayuan Rohana Yusuf turut mengekalkan hukuman penjara 18 tahun yang dijatuhkan ke atas Koong Swee Kwan.

How many times have you noticed a money changer who is not of Indian origin, or a pharmacy run by other than ethnic Chinese?

One theory is that the money changers today inherited the trade from their ancestors who literally cashed in on the early Indian economic migrants to British Malaya in the early 20th century.

As for pharmacies, or for that matter car accessories shops, it is said that they operate in close communal networks, passed on to the younger generations along with all the trade secrets.

In essence, they are cartels, which over a long period have built a wall around their businesses that even governments will find difficult to penetrate.

Many experiments by the previous Barisan Nasional government to break business monopolies met with failure.

The most recent was the technology gadget business.

In 2015, then-rural development minister Ismail Sabri Yaakob mooted the Mara Digital Mall, a plan to get the Bumiputera community involved in the lucrative business and, ultimately, to break what was seen as a one-race monopoly of the trade, symbolised by the Low Yat Plaza in the heart of Kuala Lumpur.

A touchy problem

The plan soon collapsed despite the many incentives, with complaints from traders that the same monopoly was replicated, only this time with their own people behind it.

The topic of so-called cartels or independent businesses which work together resulting in near-complete control over the market can be a touchy one.

For decades, some business sectors in the country have operated on a communal basis with activities dominated by those in a particular community.

Mara Digital Mall in Kuala Lumpur, the government’s ambitious attempt to break what was seen as a one-race monopoly of the technology gadget trade.

But where the government has failed, technology may succeed, says an academic.

Changes are in fact already taking place, said Prof Izlin Ismail, who heads Universiti Malaya’s Centre for Business Excellence.

“Look at how the money changing business has gone online,” she told MalaysiaNow, referring to the sector normally associated with those of Indian Muslim heritage.

She said car repair shops, once dominated by Chinese, would also be a dying industry.

“New cars are also going electronic and electric.”

With technological advancements, more and more people can now acquire the knowledge and skills needed to succeed in any given sector.

Government’s true role

Still, it is not the death knell for cartels, Izlin said, as they thrive due to control over the supply chain.

“Since that community controls the supply chain, it’s difficult for others outside that group to penetrate the market,” she said.

“The government has tried to open up some of these businesses to the Bumiputera community but has never really succeeded. That’s because somewhere along the supply chain, there is a communal relationship that will give preference to those within the group.”

Even so, she added, economists are generally cautious about government intervention as markets are better at allocating resources.

“Government intervention is required when there is market failure.

“The role of the government is to make markets more efficient, not to take over their role.”

Market failure usually occurs when the supply of goods and services does not meet demand.

In any case, Izlin said, there is a lack of data on the influence of cartels which makes it difficult to assess whether they are bad for the economy.

Nevertheless, economists believe that fewer barriers to doing business is good for the economy.

Follow us on Telegram for the latest updates: https://t.me/malaysianow

Subscribe to our newsletter

To be updated with all the latest news and analyses.

Related Articles

Get back in line, Khairy warns after cases of politicians cutting vaccine queue

He says his ministry will recommend that the health ministry slap compounds on those who flout the rules.

PM says it again, polls once virus crisis is over

Muhyiddin Yassin says none of the provisions proclaimed under the emergency so far is aimed at keeping the prime minister in power forever.

PM tegaskan sekali lagi, Parlimen dibubarkan bila pandemik berakhir

Pada masa ini ruang perlu diberikan kepada kerajaan untuk menumpukan sepenuh perhatian kepada usaha mengawal penularan wabak Covid-19.

Throw out your throwaway culture, green group urges global corporations

Saving the seas from single-use plastic can’t be done by consumers alone.

I have big support, Muhyiddin says as he marks first year as PM

He maintains that he still possesses majority support, rejecting accusations that the state of emergency was a ploy to remain in power.