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Rising Cost Of Living Topmost Among Issues Confronting Consumers

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KUALA LUMPUR – While the escalating cost of living formed the crux of the issues that troubled consumers this year, the government’s subsidy rationalisation programme and the impending introduction of the Goods and Services Tax (GST) also took centre stage.

The government’s decision to cut down on subsidies, effective Sept 3, 2013, was generally aimed at strengthening the nation’s economic position and ensuring that the subsidies reached the targeted groups.

In 2014 alone, the government allocated about RM40.5 billion for its various subsidy schemes. Out of that amount, RM21 billion went towards subsidising the RON95 petrol, diesel and cooking gas or liquefied petroleum gas.

And, throughout 2014, the Domestic Trade, Cooperatives and Consumerism Ministry had been kept on its toes addressing the various consumer issues that arose.


The year 2014 started with households tightening their purse strings due to an increase in electricity rates, effective Jan 1. Tenaga Nasional Bhd (TNB) had attributed the higher tariffs to rising costs of fuel, such as domestic gas, coal and liquefied natural gas.

The average electricity tariff in Peninsular Malaysia went up by 4.99 sen per kilowatt per hour (kWh) to 38.53 sen/kWh, up 14.89 per cent from the previous average rate of between 33.54 sen/kWh and 38.53 sen/kWh.

For Sabah and Labuan, the average tariff went up by 5.0 sen per kWh or 16.9% to 34.52 sen per kWh. Rates in Sarawak were not affected as the electricity supply in the state is operated by state-run company, Sarawak Energy Bhd.

However, some 70.7 per cent or 4.56 million of the 6.45 million consumers in Peninsular Malaysia and 62 per cent or 260,000 from 418,000 consumers in Sabah and Wilayah Persekutuan Labuan, who utilised less than 300 kWh of electricity were not affected by the tariff review.

The last time TNB had carried out a tariff review was in June 2011.

In February, Malaysians heaved a sigh of relief when Deputy Prime Minister Tan Sri Muhyiddin Yassin announced a freeze on toll hikes for 2014, following the government’s decision to pay RM400 million in compensation to all the toll concessionaires concerned.


In a bid to reduce the government’s spending on subsidies, the Domestic Trade, Cooperatives and Consumerism Ministry announced on Oct 1 that the fuel subsidy for RON95 petrol and diesel would be reduced by 20 sen a litre, thus increasing their pump prices to RM2.30 and RM2.20 a litre respectively.

The 20-sen reduction was seen as an appropriate measure to prevent certain quarters from misusing the subsidy by smuggling fuel to the nation’s border areas for sale.

Then, in line with the downward trend in world crude oil prices, the government announced that beginning Dec 1, the retail prices of RON95 petrol and diesel would follow the managed float system, based on an automated pricing mechanism used by the government since 1983 to determine the retail prices of fuel in the country.

Activating the managed float system ensures that the public will benefit in the event of a reduction in world crude oil prices, which are predicted to experience a downward trend next year.

The current retail price of RON97 is RM2.46 a litre; RON95 at RM2.26 a litre; and diesel at RM2.23 a litre.


To relieve the people’s burden, various initiatives have been undertaken by the government, including the setting up of an additional 1,000 1Malaysia People’s Shops (Kedai Rakyat 1Malaysia or KR1M). The wet produce offered at these shops are 10 to 46 per cent cheaper than those available at the usual markets.

It is also worth noting that the prices of household essentials under the Kedai Rakyat 1Malaysia brand name have not been raised since the brand was introduced in 2011.

KR1M offers as many as 378 choices of quality products, with their prices up to 50 per cent lower than that of their “branded” counterparts.

Other government initiatives to alleviate the sufferings of the low-come group, especially those earning less than RM3,000 a month, include the 1Malaysia 1Price and 1Malaysia People’s Mobile Shop programmes.


With about three months to go before the GST comes into force on April 1, 2015, efforts to educate the public on the new consumption tax and the reasons for its implementation have entered into the last phase.

The government will publish the Shoppers’ Guide to enable consumers to check the prices of goods that are eligible for GST.

Prime Minister Datuk Seri Najib Tun Razak, when tabling Budget 2015 on Oct 10, gave his assurance that the GST would not be a burden to the people, and pointed out that 944 goods and services would see a price reduction of up to 4.1 per cent when the GST was imposed.

And, to ensure that unscrupulous traders do not take advantage of the situation to hike prices, the Domestic Trade, Cooperatives and Consumerism Ministry is committed to monitoring prices throughout the year and not merely during the festive seasons.


Compared with developed nations where consumers are aware of the power they wield in selecting goods and services that are affordable and met with safety standards, the level of consumerism in Malaysia is still low.

Malaysians ought to exercise their wisdom in using their consumer power to choose alternatives in order to rein in their daily expenditure so that they are not unduly burdened with rising prices.

“If you want prices to drop, use your buying power to boycott (highly-priced) products and look for alternatives. Use your power to choose and be a smart consumer,” so said the late Department of Consumer Affairs Director-General, Datuk Fuad Hassan, during a talk entitled “Managing the People’s Cost of Living” early this year. – Bernama

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