Why even with no GST, prices at food outlets stay high

Low Han Shaun Looi Sue-Chern Low Han Shaun, Looi Sue-Chern Updated 5 years ago · Published on 6 Jul 2018 7:00AM · 11 Comments

Rising labour costs and utility prices, and sluggish consumer spending, have forced many restaurants to maintain their prices. – The Malaysian Insight file pic, July 6, 2018.

WITH the removal of the goods and services tax (GST), hopes ran high among consumers for a drop in the prices of food and beverages.

However, a straw poll conducted by The Malaysian Insight recently found that while the price of certain goods did drop, fresh produce prices remained the same. And while some eateries have slashed their prices to reflect the zero-rating of GST, many others maintained their prices.

Recently, a survey by the National Price Council under the Ministry of Domestic Trade and Consumer Affairs revealed that 968 complaints were lodged in June over prices of goods and another 1,023 that goods were becoming more expensive.

Half of the complaints were related to food and drinks, with 42% of complainants naming restaurants and cafeterias for not cutting their prices even after the GST was zero-rated on June 1.

In an interview with the Malay Mail, Domestic Trade and Consumer Affairs Minister Saifuddin Nasution Ismail reprimanded the businesses, urging them to “be ethical” in their pricing.

The comments drew a round of criticism from some restaurant owners, who said rising labour costs and utility prices, as well as sluggish consumer spending, have forced many of them to maintain their prices.

Petaling Jaya restauranteur See Kai Seng said they had other costs to think about, not just GST.

“Many regulars ask why the food is still expensive. We don’t know how to explain. The people’s mindset now is ‘no GST, so prices must come down’. It doesn’t work like that,” he told The Malaysian Insight.

“Pork and seafood don’t come cheap. The waiters who wait on you at your tables must be paid. The electricity bill for the air-conditioning customers enjoy must be paid, too.”

From July 1, businesses are to pay more for their power supply following a surcharge of 1.35 sen per kWh because of higher fuel and generation costs.

“It is restaurants like us who always get the short end of the stick,” See said.

Penang coffee shop owner Kong Boon Hock also said while the GST did bring down the price of some supplies, his workers’ wages, utility bills and rent have not decreased.

“Prices of fuel has not really gone down. We all know prices of vegetables and meats go up and down. So how can we simply reduce our prices?”

Kong, whose shop is in Kg Benggali in Butterworth, said many businesses were still using the stocks bought when GST was implemented and that operating costs remained the same.

Huang, 65, a wanton noodle seller in Butterworth, agreed, saying that he used to have to absorb the extra cost of raw food materials during the GST period.

“Small-timers like me just made less money. With my costs around the same now, how can I slash my prices?” he said.

Petaling Jaya hawker Ng Teng Kiat, 38, said he was disappointed with Saifuddin’s comments, and suggested that the new minister go to the ground and visited people – normal folk – like him to understand what businesses deal with.

“When these people talk, it is all politics to us. He should come to the ground. Don’t just talk down to us and take action,” he said.

Ng said he voted for Pakatan Harapan with hopes that his life would improve, not to be forced to lower his prices and have his life worsen.

The father of three also said he could not simply reduce his prices when he has mouths to feed back and pay rent and his car loan.

“Why some of us cannot do it is because the cost of living has not gone down,” he said. – July 6, 2018.

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Comments

  • The rationale for sluggish consumer demand is to reduce prices.

    Posted 5 years ago by Justice For All · Reply

  • There are several reasons - such as wage increase such as lack of foreign labour or more regulations,increase in transport cost, and then there is the catch all called price stickiness. Increase price during inflation is much easier than to drop price. The best influence of decrease price is decrease regulation and competition. Not so easy to increase competition.

    Posted 5 years ago by Bigjoe Lam · Reply

  • a can of 100+ before GST rm2.00 after GST rm2.40 no GST rm2.40 where is the enforement offier

    Posted 5 years ago by Ho Beewah · Reply

    • 100+ can with ice is RM2.20 in Puchong Jaya..

      Posted 5 years ago by MELVILLE JAYATHISSA · Reply

  • These people always come up with excuses. Just take actions against them to stop the nonsense

    Posted 5 years ago by Raymond kong · Reply

  • Even brands like Daiso . GST zero but every item still at RM5.57 . Where is the logic? Ive stopped going to Daiso. DIY better .

    Posted 5 years ago by Loh Shin Kiet · Reply

  • Trying to justify their profiteering.
    So what's next, price of buying utensils / kitchen equipment / tables & chairs

    Posted 5 years ago by Calvin Lim · Reply

  • At Mydin hypermarket economy rice outlet in Subang Jaya this week 1 medium-sized cooked ikan kembong (or Indian mackerel fish) cost RM6, the same costs RM3.50 at restaurant opposite my apt. Should it be less than this, anyone knows, or is it just right? (On another point the smaller the fish the less mercury-polluted it is)..

    Posted 5 years ago by MELVILLE JAYATHISSA · Reply

  • The job of government is to solve problems abd impediments facing hawkers first and then wield the stick.First determine if we can manage with or without foreign workers to maintain or improve the kind of lifestyle we are accustomed too which depends on foreign workers: 24hrs.eateries,domestic help,burgeoning exports.If we need them then we must make it transparent,fair,just,kind,decent to these human beings who are here just to earn a living until standards in their countries catch up:therefore call them "guest workers" or pekerja tetamu.

    Posted 5 years ago by Lachman Narain Das · Reply

  • The selling price during gst should come down. Taking the price of other raw materials and operating costs to remain the same, the 6% tax should lower the price by 6% too.

    Posted 5 years ago by Alias abdullah · Reply

  • These are but ' opportunistic ' bastards who should be penalised by the authorities !

    Posted 5 years ago by Gerald Tak · Reply