Letter to the Editor (The Star)

I wrote this letter to the star yesterday and it's published today! Yeh yeh...

=P

Extracted from The Star, dated 18 April 2008

Steps to control rising prices

CURRENTLY, world prices of foodstuff have risen dramatically and it has put a strain on many developing countries, Malaysia included. Rice, wheat and many foodstuff have hit record prices and are hurting the country due to the subsidy we spend to control prices.

The government has indicated that they are intending to study the possibility of removing some of the price controls to alleviate the strain on the expenditure of the country. However, it should only be done on the following conditions:

> Free market system is implemented and there will be no monopoly by any parties or companies.

There should be no restriction on imports and exports.

> Strict control and monitoring of prices of prepared food and beverage to prevent opportunistic behaviour among restaurant owners, etc.

Definitely, if the price controls are taken away right now, food prices will increase dramatically.

Then again, looking at the long run, when demand decreases and supply remains as it is, prices will decline as sellers cannot afford to hoard goods that are perishable.

Sellers will need to engage in price wars, promotions and discounts to sell their products. If we take away the maximum price ceiling so we must take away the minimum floor price.

This will ultimately put the power into the hands of consumers as they can decide on what and whom to buy from, provided there is a free market out there rather than a monopolised market like the current day situation.

The government should open up the agricultural industry to every Malaysian. It is sad to hear that Malaysia still imports foodstuff.

One very important reason why Malaysian farms are not as productive as those elsewhere is the land issue. Many farmers are not keen to upgrade their farms as it is on temporary land titles or even on rented land from the government.

In view of the current situation, the government should award permanent land titles to the farmers, with strict conditions like no conversion from agricultural to residential or industrial use so that it would encourage more investments in farming.

This will in turn help Malaysia cope with potential food shortages and make Malaysia self sufficient.

Such an approach may help in combating price increases when the price control is removed, and it will be removed sooner or later.

Alex,
Kuala Lumpur