Festive price hikes herald need for Economic Sabotage Act?

As Malaysians geared up to mark Hari Raya Aidilfitri this year, shoppers eager to find what they needed for their celebrations might have bumped into a common problem: the perennial festive season price hikes.

While Hari Raya sales abounded in some areas, especially as businesses looked to recoup the Covid-19 losses suffered over the past two years, prices elsewhere might have suddenly increased to far beyond what they were during non-festive seasons.

This year, problems centred on the supply of chicken, with cartels said to control nearly 70% of the market.

They were also believed to possess a monopoly over the supply of chicken feed, medication and industrial vitamins.

Throughout the month of Ramadan, meanwhile, complaints abounded over the increase in price of other goods such as beef.

There were also cases of certain quarters hoarding sugar and cooking oil, as well as the smuggling of subsidised goods.

These in turn gave rise to concerns over economic sabotage and the abuse of consumers.

Yet such problems have existed for a long time. In 2018, Abu Kassim Mohamed, the director-general of the National Centre for Governance, Integrity and Anti-Corruption, proposed the enactment of an Economic Sabotage Act aimed at combating the so-called “Ali Baba” culture in government procurement.

It was also meant to curb the sale of import permits.

The draft act was supposed to be brought to the Attorney-General’s Chambers before being taken to the Cabinet and tabled in Parliament in April 2019.

But this never materialised. Instead, the proposed act vanished from public view and was never heard of again.

The “Ali Baba” problem which revolves around the resale of tenders was seen as a plague on the economy, in addition to the cartel system that controlled the supply chain of essential goods and supplies.

Just last year, the Malaysian Anti-Corruption Commission arrested seven individuals believed to be members of a cartel monopolising government tenders worth some RM3.8 billion.

Several years ago, meanwhile, the spotlight was on a cartel which smuggled meat in from various countries and passed it off as halal.

Economist Barjoyai Bardai referred to the situation in neighbouring Philippines, where the problem of syndicates and cartels has reached the point where the masterminds of such outfits are handed the death penalty.

There, economic sabotage is defined as conduct or activities that are contrary to government policy so as to weaken or cause chaos in the economic system.

This includes price manipulation with serious negative impacts on the public, especially in the sale of basic goods and major commodities.

Barjoyai, of Universiti Tunku Abdul Rahman, said in Malaysia, a special task force was established by the Competition Commission or MyCC.

“But nothing was ever said about its progress,” he told MalaysiaNow.

While the act had gained Putrajaya’s support at the time of its announcement, Barjoyai questioned the apparent lack of development after that.

“Is it because the syndicates involve influential politicians which might affect the reputation of certain parties and their leaders?” he said.

Economist Ahmed Razman Abd Latiff of the Putra Business School meanwhile said that the act was a long-term solution which needed to be tabled and debated in Parliament.

Given the rising global inflation rate, he said, the country could expect to experience a similar phenomenon in the near future which would require a short-term solution.

“In the short term, the existing mechanisms can be improved to make them more effective,” he added.

“The agencies under the domestic trade and consumer affairs ministry already have procedures in place to prevent a spike in the price of goods.”

Razman nonetheless acknowledged that complaints usually focused on the buyers dealing with traders.

“They rarely involve those in the supply chain such as wholesalers, supplies and manufacturers,” he said.

He also said that traders could be boycotted by suppliers and manufacturers.

“We cannot expect traders to report to enforcement authorities,” he said. “Enforcement agencies go down to the field because price increases occur if there is hoarding.”

On the resale of government tenders, Razman said the existing procedures to tackle the problem should be improved to make them more open and targeted.

“Tenders should not be made without comprehensive information,” he said. “The people should be able to observe and scrutinise them.

“This will make it difficult for corrupt elements and cartels to continue to thrive.”