Analysts: Strengthen domestic market, resources to address spike in price of goods

THE government needs to take bold steps to reduce dependence on imported goods by empowering domestic production and marketing as a sustainable measure to address the spike in price of goods. 

Universiti Putra Malaysia’s Institute of Tropical Agriculture and Food Security head of the Laboratory of Agricultural and Food Policy Studies Prof Dr Abdul Rahim Abdul Samad said what is needed now is a policy which can have an immediate impact on the problem. 

“Usually our dependence on imports, either for final products or agricultural inputs such as fertilisers, affects the increase in the price of goods because it involves high costs. For example, if the current dependence on imported rice is around 30% to 40%, why don’t we aim for ‘zero import’ for rice that can be produced in the country? 

“Then encourage local traders by training them to produce fertilisers and other inputs, this method not only can reduce prices but also stabilise economic growth when the country itself has become an exporter of agricultural commodities,” he told Bernama recently. 

Commenting further, Abdul Rahim said the current price control and subsidy policy is not a sustainable solution to the problem of rising commodity prices because it is temporary and only slows down existing problems. 

“What we are currently doing is that we import goods to stabilise the market. For example, if we don’t have enough eggs then we import them, similarly for other goods, as a short-term solution to meet domestic demand and stabilise prices, but this is not a sustainable solution and is not cheap. 

“The government has to spend a lot of money with subsidies again. How long will we be able to survive in such a situation if there is no change in input or no innovation is made, the problem will continue to repeat itself,” he said. 

In addition, Abdul Rahim also suggested that a market study of the supply chain for each agricultural commodity be carried out, to identify the costs involved, thus enabling the government to formulate better and more effective policies. 

“This study needs to be done as early as from the planting stage until the end user; from this study we will know where the weaknesses are, and the problems that cause the increase in the price of goods,” he said. 

Echoing the same point, Universiti Kuala Lumpur’s Business School economic analyst Asso Prof Dr Aimi Zulhazmi Abdul Rashid said the ministries also need to ensure that suppliers who import necessities do not raise prices arbitrarily. 

“For example (increasing the price of imported goods) by more than 20% due to the recent weakness of the ringgit, while the ringgit has not weakened by 20% in six months this year,” he said. 

Aimi Zulhazmi said the government also needs to be sensitive to the supply chain for every essential item, especially subsidised items, by carrying out effective enforcement against traders who deliberately hide or raise prices at will to make a profit. 

In today’s economic situation, Aimi Zulhazmi is of the view that consumers need to manage household expenses wisely, by doing research before making purchases and spending according to needs and household income. 

“By buying only what is needed, consumers can save money, reduce waste, maintain an environment without being influenced by anyone, make transparent decisions and ultimately get greater satisfaction in their spending. 

He said the sophistication of technology now allows users to do research easily before making a purchase. 

On July 11, the Domestic Trade and Cost of Living Minister Datuk Seri Salahuddin Ayub said the government has given assurances that the price of basic goods, especially those which are subsidised, will not increase excessively this year.