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ALOR STAR: The government is urged to expedite the rolling out of a consumer food baskets and voucher systems to manage the leakage of subsidies.

Consumers Association of Kedah (Cake) president Muhammad Yusrizal Yusoff said the move would help to plug the abuse of subsidies and optimise the government's social assistance to target groups.

Yusrizal stressed that it was empirical for the government to adopt the system in wake of a spiralling inflation rate.

"The new monthly minimum wage of RM1,5000 implemented since May was supposed to provide a cushion to the impact of a higher cost of living to the B40 group.

"However, from our observation the price hike of essential goods and services have negated the additional RM300 paid to minimum wage earners," Yusrizal said.

Citing an example, he said based on a survey carried out on low-income earners such as security guards, they were still struggling to cope with the inflation rate spike.

"Although their pay has increased, their cost of living and vehicle instalments have also increased.

"Even civil servants especially those working in big cities in Klang Valley are also struggling to cope with the high cost of living," he said.

Yusrizal added that theoretically, the focus should be on upgrading the people's standard of living before the government allowed the price hike of goods and services to follow suit.

"But what we are seeing now, the price of goods increased first, then we raise the minimum wage," he said.

He added that to compound matters, business operators were passing down the 25 per cent additional labour cost to consumers following the enforcement of the new minimum wage.

"At the end, consumers will have to pay more for goods and services," he said.

Yusrizal said to make matters worse, some business operators were taking advantage of the situation by profiteering.

"This is where the government enforcement arm has to act swiftly and firmly against any act of profiteering.

"We do understand that the cost of doing business has risen with the new minimum wage and pricier input costs but it should not be to the extent of profiteering.

"We have discovered previously that one party was reaping a whopping 60 per cent profit margin in the chicken supply chain. This is wrong and needs to be addressed by the authorities," he said.

As such, Yusrizal said the government should consider expediting the rolling out of a consumer's food baskets and vouchers for subsidised goods instead of just a cash handout system.

He said this was in line with the call made by the Federation of Malaysian Consumer Associations (Fomca).

"We are made to understand that Universiti Putra Malaysia has carried out a study on consumer food baskets.

"This mechanism offers a more comprehensive social security mechanism to ease the burdens of the target groups.

"It is based on locality, both urban and rural areas, how much each family spends on essential items monthly and so on.

"The weakness of a blanket subsidy is some people tend to benefit more but some are not benefiting much because it is not based on actual household size.

"For instance, the government annual cash handout of RM2,600 tends to benefit small families more, as compared to bigger families," he said.

Yusrizal pointed out that while the people might be happy to receive a cash handout, unscrupulous business operators would view that consumers have the purchasing power to pay more for goods and services.

"At the end, the B40 families are not getting the actual benefit from the government assistance and have to pay more for goods and services instead," he said. Yusrizal was responding to the New Straits Times special report on the impact of new minimum wage on low-income earners and consumers.

It was reported that minimum wage earners were struggling to cope with the higher cost of living despite earning RM300 extra monthly.

Source: https://www.nst.com.my/news/nation/2022/07/814222/implement-food-baskets-and-vouchers-manage-leakage-subsidies