Friday, October 24, 2008

Lower Price for Goods & Services?

With the looming threat of a recession in Malaysia, the cost of living in the capital city is still high. Majority would agree that their salaries do not move in tandem with the cost of living (it's always never enough though).

The government did the unthinkable by raising the petrol price by a whopping 40% at one go in June 2008 and immediately after the increase, providers of various goods and services took the opportunity to raise their fees, fares or prices.

Subsequently, we saw prices being increased for food ....... where the general public has to purchase no matter what. Secondly, the materials used for the housing industry went up in tandem which caused getting a roof over our head even harder to achieve. Thirdly, transporters have no qualms in increasing their charges.

The Malaysian government, in seeing that petrol price has dropped as much as 60% from its highest level of US$147 per barrel, has decided to reduce the price of petrol down to the current pricing of RM2.30 per litre. With this lower petrol price, the government would be thinking that generally all other products and services would see a lower pricing and curb the inflation one way or another.

The government did mention that price will be adjusted if the world crude oil price has stayed below US$72. It did but government is always slow in reacting.

I guess the politicians sitting in those top level government ministries are not well equipped with the happenings around the world. Professionals in their respective fields are finding it hard to adjust to the current financial meltdown. Cost is rising but economy is dwindling. Don't tell me that our government has not heard of this quote before - "when the prices for goods and services go up, it will stay up forever".

Then the Prime Minister has the guts to tell us, the citizens and the consumer associations / groups, to assisnt the government in reducing the prices for the goods and services. How in the world do you think we can do that? If your government ministries are not functioning as it should be in enforcing the right price to be transacted, how do you expect the poor citizens to command that?

A company where the government has a strong say has not even buck in decreasing their charges. That company is Tenaga Nasional Berhad ("TNB"). Their recent price increase effected in July 2008 was due to higher generation cost especially with the increase in the price of fuel and gas. Now that both of this energy products' prices have reduced significantly, we are still waiting for the government to get TNB to reduce the electricity charges.

Everyone is already complaining that prices are still going up or staying where they are despite the reduction in petrol price. What's happening?

When food and retail outlets were questioned as to why their prices were maintained and do not reflect the reduction in petrol price, the reason given was - "suppliers didn't reduce their prices". You see! Short, sweet and simple reply. That's all they will tell you and the government can't do anything.

The Pan Malaysian Bus Operators Association and Pan Malaysian Lorry Owners Association had already mentioned that they can't absorb the cost of other goods and services and therefore unable to pass down the savings in terms of petrol price. The government didn't foresee this?

The Federation of Malaysian Consumers Association has mentioned that there is nothing to celebrate on this petrol price reduction as they don't think the prices of other goods will also be reduced. These three associations are telling truth and it's a fact.

When I heard about complaints of high prices and that it will go up even higher, I will give a them a reprieve. I will say don't worry, the prices will definitely come down. To which they will respond "How can? It won't already". That will be the typical respond.

But it will go down definitely. Come recession, where demand for goods and services will reduce, the economics law will set in. Lesser demand will cause the lowering of prices. In order to see the prices going down, are you prepared for a bad recession? It will go down but our life will be affected as well. Some people you know will be retrenched, deemed redundant, put into 'cold storage' and so forth during a recession, maybe you.
Tags: Recession, Financial Meltdown, Economics Law, Malaysia, Petrol Price, Tenaga Nasional Berhad, TNB, Pan Malaysian Bus Operators Association, Pan Malaysian Lorry Owners Association, Federation of Malaysian Consumers Association, FOMCA



Blogger 고양이 아줌마 (Cat Lady) said...

It is true that in economics we learned that when demand drops, price drops, too.

However, I think we are now in a unique economic situation where demand drops, but price increases. I see it happening in shops in Kepong now. This is called "stagflation".

I gave a brief definition of the word in my post [url][/url].

24 October, 2008 23:25  
Blogger Johnny Ong said...

blackie - that's the thing, stagflation. this is the situation where every working folks in our generation have not faced before

25 October, 2008 13:54  
Blogger Kuching Remisier Blog said...

now got many new way in business.. haha..

05 November, 2008 15:29  
Anonymous Anonymous said...

In such difficult situation, many see it as opportunities to make fortune. We have been robbed!!!

05 November, 2008 15:44  
Blogger Johnny Ong said...

crazyfool - wah, u really maximise yr innit thingy

cazzy - what to do. people in biz tend to be greedy. they wld say that they were smarter in becoming biz owners than being an employee

14 November, 2008 04:08  

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