BANGI: Malaysia needs to aim for a gradual move towards an economy where goods and services reflect fair pricing, said Malaysian Inclusive Development and Advancement Institute (Minda-UKM) director Prof Tan Sri Dr Noor Azlan Ghazali.
He said for prices to be fair, there must be sufficient competition and there must be no mischievous actions - no deliberate price manipulation, profiteering or similar practices.
"We rarely discuss creating fair market prices. In the end, we fail to progress towards it and instead drift further away from a fair market. We do not really understand what fair pricing means and assume the price we pay is it. A good example can be seen in universities."
Noor Azlan added that on average, students across the board only pay 10 per cent of the cost, while the government covers 90 per cent. People then perceive that as the actual price.
"As a result, it becomes difficult to retain excellent lecturers and professors. This means we are distorting the market," he said in a panel session at the Bicara Persada organised by Universiti Kebangsaan Malaysia (UKM).
He added that the country must be ready to live in a world where the price for every product is fair.
"I lean towards living in a world where prices are determined by a healthy market. A healthy market should be the target. A healthy market means that the price of a product or service is fair.
"If it rises, it rises fairly. For instance, during the monsoon season, when fishermen face difficulties going out to sea, it is fair for prices to increase because they are risking their lives. Surely, we cannot expect prices to stay low in such situations," he added.
Noor Azlan said with the ongoing turmoil in the Middle East and if the conflict intensifies, it would be unrealistic to expect oil prices to remain unchanged. This is due to disruptions to oil supply, shipping, and logistics are inevitable in such situations.
"During the height of the Ukraine-Russia war, grain prices had to rise because they are the world's main suppliers. People should understand that these increases will happen. That is the power of a fair market," he said.
Noor Azlan emphasised that if fairness negatively affects certain groups particularly those with low incomes, they should be provided with assistance, but the market should not be disrupted.
"For example, the most expensive tuition fees are at top universities like Harvard. However, many students actually do not pay those fees.
"The listed price remains, but they have endowment funds to assist those in need. Our problem is, while our intention to help is good, we end up interfering with prices. When prices are disrupted, chaos ensues," the economist said.
Noor Azlan pointed out that different products require different subsidy methods.
"Take healthcare, for example. How many people want to 'consume' healthcare subsidies? Who would willingly injure themselves every day? No one. We don't want to get sick. So, it is different from oil.
"Different products like education, healthcare, and others must be handled correctly," he added.
He questioned the need to tie everything to income in order to receive subsidies.
"Let's think carefully. I do not want to reveal some evidence, but you will be surprised that it is often unnecessary. There are many other methods that can be used instead of solely tying it to income. We must balance implementation with the ideal aspects of it," he said.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said most prices have already followed market prices, such as eggs and chicken, and the impact has not been significant to drive market prices to a level that burdens the public.
He said in response to this situation, perhaps that is a direction the government can take.
"However, we understand that when it comes to RON95 prices, the impact is indeed significant because its usage is so widespread. If we look at its weighting in the consumer price index, RON95 constitutes about 5 per cent, while diesel is only 0.2 per cent. This means RON95 usage is extensive.
"Therefore, any form of price adjustment should be suggested but needs to be addressed properly," he told reporters after his session at the forum.
Afzanizam said ideally, it should be returned to the market; however, mitigation measures must be emphasised.
He noted that mitigation measures could take the form of transfer payments, such as the Rahmah cash assistance, to help sustain and preserve the purchasing power of the people due to price hikes.
"However, that remains an aspiration. We will wait to see what the government announces in terms of implementing the rationalisation strategy for RON95," he added.
Afzanizam does not dismiss the possibility of using MyKad as a mechanism since the technology of MyKad has not been fully utilised and it could be used.
"Apart from MyKad, MySejahtera might also be applicable, as we are familiar with it from the Covid-19 period due to its efficiency. Perhaps that is one of the instruments that can be employed to channel more targeted subsidies," he added.