By Parliamentary Opposition Leader, DAP Secretary-General and Member of Parliamentary for Petaling, Lim Kit Siang, on Saturday, 18th August 1979:
DAP calls on Government to freeze the new cement price increase for one month and to hold public inquiry for the Ministry of Trade and the cement manufacturers to justify the huge cement price increase which would have the immediate impact on introducing a $100 million inflationary increase in country.
The 60% increase in the price of cement throughout Peninsular Malaysia approved by the Ministry of Trade and Industry would cost the people over $100 million in added burden and inflation, without taking into account the chain effects of price increase in houses, rentals and other services.
Before the price increase to $ 8.20 a bag, the delivered-to-site price in the West Coast varies from $5.50 a bag to $6.00. As the West Coast predominate in building activities, calculating on the basics of an increase of $2.20 a bag and on the 1978 consumption figures of 2.2 million metric tons ( 20 bags to a metric ton ) , we get the increased consumer burden of 2.2 x 20 x $2.20 = $ 97 million.
The only people who could be happy with this new Ministry of Trade and Industry increase are the three large cement manufacturers, Tasek Cement Berhad, Associated Pan Malaysia Sdn. Bhd. (APMC) and Cement Industries of Malaysian Bhd. (CIMA), who though asked for a new ex-factory price of $ 12 a bag, must have never expected in their wildest dreams that they would get a walloping 60% increase from the Ministry of Trade and Industry.
This is Robin Hood in reserve, where a few cement tycoons are going to make a hundred million a year at the expenses of the ordinary people! It will also push up horse prices, rents, starting off another serious round of inflation in the country.
The steep increase in the cement price cannot be justifiable under any circumstances, especially as we take into account the following factors:
1. Before the price increase, the highest retail price in the East Coast is $7.80 a bag, and there could be no justification for a general price increase to $8.20 a bag.
2. The price of imported cement will be in the region of $7.25 and there is no reason why locally-manufactured cement after enjoying so many years of pioneer status and tax benefits, should be so inefficient. The price increase to $8.20 per bag tantamount to the ordinary Malaysians paying for the inefficiency of the cement plants in the country, of the many being soaked by a few.
3. According to Datuk Seri Dr. Mahathir, the local cement manufacturers produced 2.37 million metric tons, last year, while local consumption stood at 2.2 million metric tons. There was therefore no shortage of production, and whether shortage which afflicted the country in cements manufacturers to jack up prices.
4. The cement manufacturers had been reporting big profits from their operations, and this new price increase will bring to the cement manufacturers an even greater windfall of profits at the public’s expense.
5. Although the Ministry of Trade and Industry announced that the new price of $ 8.20 a bag is the ceiling retail price, from past experiences, this $ 8.20 a bag will becoming the standard minimum price throughout the country, leading to subsequent difficulties in getting cement supplies in the East Coast as it is more profitable to sell in West Coast than in the East Coast at the same price.
I am very shocked by the manner in which the Ministry of Trade and Industry had approved the new cement price increases, without taking into consideration the interests of all interested parties, and in particular, the consumers.
The Ministry of Trade and Industry should cause to behave as if it is the ‘know all’ as to what is the right price for a particular commodity, without having to justify to the public its actions.
The cement price increase has already led housing developers to warn that there would be a steep increase in price of houses. Although the Deputy Prime Minister, Dr. Mahathir Mohamed, warned that firm action would be taken against housing developers who make unreasonable price increases on the ground of cement price increase, the public are rather skeptical as to what the government could really do, apart from making fierce statements and warnings. A case in point is the price of imported fruits, where no amount of Ministerial statements and speeches had succeeded in bringing down the prices of apples, oranges, grapes within the reach of ordinary consumers despite the reduction in the import duties.
From past record, the Government would be completely powerless to stop a general rise in price of houses over and beyond the cement price increase.
As the Government has failed to take into account the many implications and consequences of the steep cement price increase, I call on Dr. Mahathir to order a freeze in the new cement price increase for one month, and to hold a public inquiry for the Trade and Industry Ministry and the cement manufacturers to justify the huge price jump immediately costing the people $100 million, fuelling another round of inflation. At the public hearing, the builders, contractors and other interested parties, like consumers organisations, could make their views and interests heard, so that a public case could be made out for the cement price increase at so steep a rate. If the cement manufacturers could not made out its case in public, accompanied by its profitability figures, then the cement price increase should be reduced.
This public hearing should of course be headed by a independent and respected chairman or Commissioner, who has no departmental or vested interests to serve. This public inquiry may also serve as a precedent for the establishment of a Prices Commission in the country to consider the justifiability or otherwise of price increases.