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Dear Editor,

As an NGO concerned in the welfare of the society, JIM (Jamaah Islah Malaysia) wishes
to invite the government to tackle the grouses of the abrupt rise of cost of living among
Malaysians with the Islamic spirit of prudence and justice in mind. Among the grouses
that has been repeatedly highlighted is on the simultaneous and steep increase of the
prices of essential goods and services whenever the ceiling prices of input materials are
increased.

JIM understands the need of the government to fix the prices of certain essential goods
and services in protecting the welfare of the underprivileged section of the society,
while at the same time maintaining the competitive nature of private businesses in
offering their best products and services to the consumers. Therefore, JIM hopes that
the government rectifies the loopholes of the Price Control and Supply Control Acts that
may cancel out the positive benefits of the proposed Fair Trade Act which will be tabled
in the Parliament end of this year.

Trade collusion has always been the coping mechanism for producers to maintain profit
in the presence of government supply intervention (through price ceiling, quota,
monopoly etc). Hence, JIM believes the recent call towards the de-monopolization of
PUSPAKOM serve as a positive sign that the Malaysian businesses and consumers want
greater efficiency of trade in Malaysia through proper implementation of anti-
competitive regulations and policies in line with the principles of transparency,
accountability and integrity.

Both Pan Malaysian Lorry Owners Association (PMLOA) and Pan Malaysian Bus
Operators Association (PMBOA) have been welcoming the call to abolish PUSPAKOM’s
monopoly albeit their own respective anticompetitive and cartel-like business practices
after the recent pump price hike. Northern states’ lorry operators affiliated with PMBOA
had been reported to collude into a 35% rate increase strategy in June 2008 and
Kenderaan Transnasional Berhad (KTB), a member of PMBOA, had misconstrued the
CVLB’s setting of bus fare’s ceiling price as a valid excuse to get into a price fixing
scheme with its rival, Seranas, on the highly competitive Federal Highway bus route in
August 2008.

Prices of transported goods were hiked with similar indiscretion as the PMLOA members’
trade collusion, and the public transport industry had failed to streamline their
operations (for the benefit of the users) the way they streamline their profits (for the
benefit of their shareholders). In the end, any other businesses not directly impacted by
the fuel hike have no choice but to increase the prices or reduce the quality of their
deliverables to remain competitive and everyone within the economy will end up
negatively affected.

Various texts in the Quran and the Prophetic Traditions regard monopolistic and trade
collusion behaviors as detrimental to the facilitation of the exchange of private goods
and services that is supposedly to justly serve the rights of all involved parties. Like
modern economists, past Muslim jurists well-versed in economics have allowed price
control mechanism only in trades where the interests of the general public can’t be
justly served by the free hands of the market forces.

Such trades, which involve public goods and services such as public transportation and
public service concessions (such as vehicle inspectors, highway operators and water
suppliers) must be made thoroughly accountable to the stakeholders through stringent
monitoring of key performance indicators, the way standardization of weights and
measures are enforced to ensure fair trade during the Prophetic era in Madinah. If the
trusted providers with exclusive rights to deliver public goods and services fail to shape
up, they must be rightfully asked to ship out.

With rightful distribution of risks and responsibilities between the relevant authorities
and the private investors, a fair level of playing ground with high degree of
accountability can be achieved. The exclusivity of rights to deliver public goods and
services must be properly managed by the elected government servants with the rakyat
as their sole beneficiary, and without destroying the competitiveness among private
investors in delivering their best.

JIM wishes that the government as a responsible caretaker of the consumers and
business owners interests will be able to formulate and implement a prudent and just
Fair Trade Act so that the current trend of rapidly increasing cost of living can be halted,
or even reversed.

M Zulkarnain Hamzah
Committee of Good Governance and Social Justice, JIM

Reference

The Star - Wednesday June 4, 2008


Fair Trade Act needed to curb malpractices
http://thestar.com.my/news/story.asp?file=/2008/6/4/nation/21445124&sec=nation

The Star - Thursday June 5, 2008


Lorry operators in northern states increase rates by 35%
http://thestar.com.my/news/story.asp?
file=/2008/6/5/nation/20080605164334&sec=nation

The Star - Sunday August 31, 2008


Transport Minister studies requests to remove Puspakom's exclusivity
http://thestar.com.my/news/story.asp?file=/2008/8/31/nation/22212727&sec=nation

PS The writer owns hard evidence on price-fixing scheme between competing CityLiner
Selangor (subsidiary of KTB) and Wawasan Sutera (owned by Seranas) bus operators.