The government cannot ease the burden of the rising cost of living with price control alone. FILE PIC

IT has been a month since the government replaced the hugely unpopular Goods and Services Tax (GST), reverting to the Sales and Services Tax (SST) system.

While consumers were hopeful that prices of goods and services would drop, unfortunately, this did not happen. The Domestic Trade and Consumer Affairs Ministry continues to receive some 2,000 complaints on issues related to SST every day.

Prices are expected to rise further this month when suppliers begin to pass on the SST to consumers, continuing the high cost of living debate, which I doubt the government will be able to contain, no matter how much enforcement is implemented.

Truth is, the landscape in which we exist, will continue to change.

While the Price Control and Anti Profiteering Act 2001 regulates businesses’ profit margins, it is not able to control business operating costs, which are influenced by factors ranging from operations to production, supply chain and retail.

One key factor that greatly influences business costs is the strength of our currency value against the US dollar and we all know that Malaysia is heavily reliant on food imports.

As reported by the media, quoting the Agriculture and Agro-Based Industry Ministry, Malaysia’s food import bill for 2015 was RM45.39 billion for a country with a population of 30 million people then.

To contain price increases, the government must strengthen the value of currency, but, unfortunately, this may have a reverse impact on our exports. Malaysia may lose its competitive edge, as described by the prime minister when justifying a RM50 increase in minimum wage recently.

The other impact with a strengthened ringgit is that the government will lose its commodity tax revenue, especially petroleum tax.

We are trapped between managing cost of living and promoting competitiveness.

One solution is for the government to implement strategic social security initiatives to ease the burden of targeted segments of society, including students, pensioners, senior citizens, single parents, and abandoned, displaced and poor families.

A lesson can be learnt from the myriad initiatives implemented by the Selangor government and it is hoped that these initiatives could be rolled out nationwide by including them in the national budget.

Darshan Singh, Kuala Lumpur

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