Much to do about #kangkung

Ong Kian Ming
The Star Online
January 22, 2014

Fluctuations in the prices of goods and services are part and parcel of any economy.

UNDERLYING the furore surrounding kangkung brouhaha lies a much more fundamental political question. Namely, should we blame the Government for increases in the price of goods and not give the Government credit when the price of goods decrease?

Prime Minister Datuk Seri Najib Tun Razak is at least half right when he questions the fairness of blaming the Government for rises in the price of let’s say, vegetables as a result of uncontrollable factors such as changes in weather conditions.

But if we should not blame the Government for uncontrollable increases in the prices of vegetables, surely we cannot praise the Government when the price of the same vegetables decreases? Gyrations in the prices of goods and services are part and parcel of any economy especially one with a decently functioning market for these goods and services.

Demand and supply forces work in the short term to determine prices, which means that prices would sometimes go up and sometimes go down. And while we will inevitably gripe when the cost of goods increase, most fair minded people would not heap the blame on the Government when they know that the cause of these price hikes are beyond the control of the Government.

This is what should be understood: the rakyat is not blaming the Government for short-term price hikes as a result of uncontrollable factors. What the man on the street is increasingly incensed about is the across-the-board price hikes this year, and most probably next year, being directly or indirectly the result of government policies.

The increase in the price of sugar is the result of the Government’s withdrawal of the sugar subsidy. The increase in the electricity tariff is the result of the approval of government agencies, notably the Energy Commission.

The expected increase in the toll rates later this year is the result of badly negotiated contracts in these public-private partnership agreements, which give excessive profits to the concessionaires. The introduction of the 6% Goods and Services Tax (GST) is a result of the Government to cut its own excessive spending and reduce wastages. This is what the average man on the street is blaming the Government for.

Of course, some may argue that these price increases are necessary and positive for the country moving forward as part of the larger plan to restructure the economy by rationalising subsidies and reducing its distortionary effects. The GST too, they argue, is a fairer system since it is a more broad based tax and also reduces leakages which currently exist in the system.

While these arguments may appear rational and reasonable, it quickly falls apart upon closer examination. Moves at restructuring the economy by withdrawing subsidies addresses only the price distortion aspect without correcting the distortions in the supply side of the market.

Take sugar for example. Why is it the case that economic restructuring does not entail allowing more than just the current two sugar manufacturers to operate in the Malaysian market?

Surely the entrance of more players into this market would increase competition and possibly even reduce the price of sugar even after the removal of subsidies.

Similarly, allowing Tenaga to increase the electricity tariff due to needing future investments in the grid but not set strict and transparent KPIs for Tenaga to manage it costs comes across as yet another lop-sided government policy. Also, why should toll concessionaires enjoy profit rates in excess of 40% when the internal rate of return stipulated in many contracts is only 12%?

Incidentally, according to the latest figures issued by the Department of Statistics, the price of water spinach – yes, kangkung, by its other name – actually increased by 7.7% in November 2013 compared to the previous month, the second highest increase after sugar (10.3%). So, by right, the Government can’t even take credit for the decrease in the price of kangkung.

Dr. Ong Kian Ming is the MP for Serdang.

  1. #1 by Bigjoe on Monday, 27 January 2014 - 8:00 am

    These technical points are valid and necessary obviously but events are overtaking such fundamental arguments. Seberang Jaya had a rally 1500 strong – clearly its now more than just Kangkung – its about their respond to the criticism particularly the ugliness in Seberang Jaya against LKL..

    Those old enough to remember, its how in 1969, these things got manipulated to result in all the problems we have today. Again, while LKL and his supporters have all the right in the world, in Malaysia, we need to do better to really fix the problem and avoid a disaster. Its time for these same people to anticipate what the extremist will again manipulate the situation and have answer for it.

  2. #2 by lee tai king (previously dagen) on Monday, 27 January 2014 - 8:43 am

    We jeered when a goal was missed. But shouldnt we cheer when one was scored?

    Hey dude, politics aint no football. Get it?

  3. #3 by boh-liao on Monday, 27 January 2014 - 9:34 am

    Kangkung, sotong – prices r UP n up
    Surely with the coming LNY, prices of fish, udang,etc also UP n UP
    Violence-intent Perkosa-UmnoB kaki will continue 2 protest n twist things as RACIAL when rakyat complain abt Barang Naik, Banyak Naik
    No need 2 wait 4 some1 2 P!ss at a flagpole in d CM’s compound

    Keep an eye on WHAT’s going on in our neighbours UP north, DOWN south, and FLANKING us left n right

  4. #4 by Bigjoe on Monday, 27 January 2014 - 11:51 am

    So their respond to PR’s outreach on the crises is their equivalent of sending Mahmood Ahmadinejab to talk nuclear talk with the US…Its so bleak..

  5. #5 by sheriff singh on Monday, 27 January 2014 - 11:53 am

    We have a Finance Minister who really does not know anything about finance. Consequently he and his Second Finance Minister (surely a big wastage) just bungles along implementing and doing things that don’t make sense to the general public.

    Why does Tenaga Nasional, a monopoly that makes BILLIONS of ringgits annually, need to raise tariffs that will no doubt add more BILLIONS to its coffers?

    Let there be more competition and you will see prices fall – just like the call and SMS rates for cell phones. Add another competitor or two and Astro will shiver.

    Our kangkong PM cum FM can do much, much better given the resources he has behind him but unfortunately, he just cannot. It appears to be beyond his intellect and capabilities, and will-power. Maybe the hunting wolf packs just won’t let him.

  6. #7 by boh-liao on Monday, 27 January 2014 - 7:29 pm

    Looks like PR is also macam kangkung Perkosa-UmnoB/BN
    What’s going on in PR in Selangor, esp PKR, in-fighting 4 power among various power grps
    Rumour of ousting, back stabbing, n actual intentional resignation 2 pave way 4 a buy erection, WTF

    • #8 by loo on Monday, 27 January 2014 - 8:12 pm

      This is a problem when DAP NEVER make effort in getting more competent melayus to join its ranks. If DAP got competent melayu, no problem. Wanna bet?

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