AS Malaysians grapple with a high cost of living, poor policy planning is something we don’t need. In the past few weeks, we were bombarded with multiple policies that were not well thought-out concerning chicken prices. The policies have hurt both consumers and businesses. 

The immediate effects on businesses are apparent. Chicken farmers are hit by a triple whammy of high feed costs that are the result of the Ukraine war, a price ceiling, and an export ban. Unclear policy action has left traders struggling to cope with the crisis. Ultimately, businesses need to make a trade-off: if the crisis proves to be only momentary, firms can take some losses in the short run in the expectation that the situation will improve soon. However, should the crisis linger, firms may have to risk enraging policymakers by disregarding the price ceiling or be forced to shut down.

Businesses are extremely sensitive to government policies. While our government introduced one bad policy after another, some businesses have decided to ignore such orders as the price ceiling. The failure of the government to consider business perspectives has not only shattered confidence but created a great diversion between the government’s priorities and business goals, making any form of future policies less effective than they otherwise would be. 

The war between businesses and government hurts consumers. The effects are not contained within the poultry industry but they spill over into the market. The most immediate impact can be seen in the direct supply line: from mamak stores to restaurants, the high food costs are reflected in the menu. The indirect effect is more detrimental. The expectation of price inflation propels firms to take pre-emptive measures by increasing the prices of goods and services, even if the businesses in question are unrelated to chicken. Such actions caused inflation to rise to 2.8% in May, the highest monthly record since July 2017. 

Foreign trade takes a tremendous hit. While our politicians flipflop over policies that don’t make sense, our neighbours have been observing us with keen eyes. Singapore, especially, is most impacted by our export ban. The import-reliant country has suddenly lost its monthly supply of 3.6 million fresh birds, which make up about 34% of its total chicken imports. 

By banning fresh chicken exports to Singapore, our politicians show us they are prioritising domestic needs. However, this view is highly myopic and will cost us dearly long into the future. It presents our country in an extremely bad light. We portrayed ourselves as an unreliable trade partner who will not hesitate to cut supply in short notice. Our policy has deeply hurt Singaporeans, and as a country wishes to future-proof its food security, Singapore has already taken action in the past few weeks to diversify away from the Malaysian market. Just yesterday, Singapore announced that it had approved Indonesia as a new source of chicken imports, on top of Thailand and Vietnam. 

As the ban is prolonged, Singapore’s diversification strategy will further cut Malaysia’s export markets. Will it continue to buy from us when the ban ends? How many chicken farms will shut for good due to decreased demand and increased cost? How many jobs will be lost? Even though we could not put a definite number to these, one thing is clear: we will have less the longer our government struggles to get its act together. 

Global trade is based on mutual trust, understanding and cooperation. Our country has shown neither of the three. In other words, our trade partners have no reason to trust that we will uphold our end of the deal. Of course, this is not an isolated incident. We have a history of breaking trade agreements and business contracts when it suits us. Our track record has already hurt us in many ways. Investors are increasingly bypassing Malaysia and seeking more dependable regional markets, such as up-and-comers Indonesia and Vietnam, two of the hottest investment destinations in Asean in recent years. If the current trend persists, we will continue to miss opportunities in the best-case scenario and lose market share in multiple sectors in the worst. 

The next logical question, is if there is anything we can do? Damage has been inflicted. That said, it is possible to start taking positive actions and salvage our reputation. We still have a competitive edge. For instance, even as Singapore is buying its chicken from others, most new exporters have been  granted a licence only for frozen poultry. Malaysia remains one of the largest sources of fresh chicken to Singapore. Our competitive edge is difficult to surpass since the shipping of raw food products is subjected to stringent criteria that most countries simply cannot meet. Before Singapore finds alternative long-term solutions, we need to reinstate the good relations with our neighbour and reassure it of our good intentions. The first step is to lift the ban and re-open the poultry trade between our two countries. Following that, we should put in place a memorandum of understanding, or an agreement of a similar nature, to reiterate our commitment as a reliable supplier. We need these actions to be carried out fast and efficiently to minimise the damage we have caused. – July 1, 2022.

* Doris Liew Wan Yin reads The Malaysian Insight.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.