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Experts: End food, medicine monopolies

Publish date: Sun, 26 Mar 2023, 11:52 AM

Experts believe the government should break monopolies in industries that have a direct impact on the cost of living and the people's livelihoods, such as the food and medicine sectors.

The call came on the heels of Prime Minister Datuk Seri Anwar Ibrahim's announcement that the government would review all monopolies to protect the welfare of the people.

Federation of Malaysian Consumers Associations secretary-general Datuk Dr Paul Selva Raj singled out the food and medicine sectors, where the existence of monopolies and cartels was acknowledged in a recent study by the Malaysian Competition Commission (MyCC).

"In a number of market surveys by MyCC, they found that monopolies and cartels were manipulating prices in the food and medicine sectors.

"We hope the government can start breaking up monopolies in the food sector. When we liberalise the food sector, food prices will go down.

"Monopolies have a negative impact on consumers' welfare. Monopolies block opportunities for new entrepreneurs to explore the market.

"By liberalising the market, consumers will be given options and the right to choose. It may also help the government reduce the prices of goods instead of depending on subsidies."

He did not provide examples of companies that have monopolies in the food sector.

Anwar's announcement on ending monopolies came a day after the Transport Ministry announced it would allow all qualified parties to provide vehicle inspections from Sept 1 next year, ending Puspakom's monopoly.

On Tuesday, the government announced that five highways nationwide would begin implementing an open-payment system by September. The announcement came after Anwar hinted that the Touch 'n Go monopoly would be reviewed.

In July last year, Anwar, who was then opposition leader, slammed the government extending the concession period of Padiberas Nasional Bhd, which he said had a monopoly of rice imports.

"Why continue the monopoly policy to give the rich a profit when we are talking about efforts to reduce people's burden?" Anwar had said in the Dewan Rakyat.

Centre for Market Education chief executive officer Dr Carmelo Ferlito said ending monopolies would benefit consumers.

"It will boost competition, benefit consumers and create a more vibrant economy. It will also boost confidence in domestic and international investors," said the senior fellow at the Institute for Democracy and Economic Affairs.

He said natural monopolies occurred due to peculiar conditions in certain industries where the leading corporation had the merit, while government-induced monopolies occurred when firms were appointed by the administration, giving them a dominant position in the sector.

"In this second instance, we need to do whatever it takes to dismantle the conditions (government protection) that led to that monopoly."

Transparency International-Malaysia president Dr Muhammad Mohan said the government's move to end government-induced monopolies would ensure improved services for the people at a lower cost.

"By removing monopolies, there will be greater transparency. Everyone is on a level-playing field and they have to compete.

"Corruption is an added cost of doing business, but without monopolies, corruption can be reduced or even eliminated when there is transparency and strict competition."

Economist Associate Professor Aimi Zulhazmi Abdul Rashid said dismantling monopolies should be done on a case-by-case basis.

"If a monopoly provides cheap, good and reliable services to the people, opening it up to new players would not be a priority.

"However, companies that deliver poor service or products and are in conflict with the public must be immediately reviewed.

"I wouldn't say all trades must be open to competition.

"Huge capital investment is needed to compete with existing and leading players," said the economic analyst at Universiti Kuala Lumpur's Business School.

He said the government's move to dismantle monopolies that did not benefit the people was a step in the right direction and would spur the country's productivity and economy.

"For Malaysia to prosper, there must be open and fair competition to boost productivity."

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