ASEAN HEADLINE-ECONOMY | Minimal Impact: ‘Diesel price hike may not significantly affect costs’
Factors such as market competition, consumer demand elasticity, overall economic conditions play role in determining extent to which businesses can adjust prices: Retailer
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PETALING JAYA: The increase in diesel price to RM3.35 per litre from RM2.15 is not expected to significantly impact the prices of essential goods or living costs, said Mydin Mohamed Holdings Berhad managing director Datuk Dr Ameer Ali Mydin.
“While certain businesses may interpret the removal of subsidies as an opportunity to justify price hikes, it may also prompt others to reassess their pricing strategies, especially those operating in sectors directly affected by fuel costs and related expenses.”
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Ameer Ali was responding to vehicle-towing companies, local coffee shops and concrete producers who raised their prices following the diesel price hike.
On the “Budi MySubsidi Diesel” programme for qualified drivers of private diesel vehicles, he said businesses that were not eligible for the subsidy are the ones raising prices.
“However, it is crucial to maintain the perspective that the immediate impact of the diesel subsidy removal may not significantly affect their businesses.
Memento Maxima Digital Marketing“Factors such as market competition, consumer demand elasticity, and overall economic conditions play a role in determining the extent to which businesses can adjust their prices.”
Ameer Ali said many businesses operate within a complex ecosystem, in which they must balance customer loyalty, operational costs, and regulatory requirements.
“We also have laws to control prices of goods and charges for services to prohibit profiteering. This means that decisions regarding price adjustments are often carefully weighed.”
He said Mydin intends to hold off on price increases for the moment unless compelled to do so by suppliers, adding that while the removal of subsidies is necessary, it is important for the government to address any leakages in the subsidy system.
“Hopefully, the elimination of subsidies will eventually benefit the B40 segment.”
Malaysia Retailers Association manager Suerin Yee declined to comment on the impact of the diesel subsidy removal, on grounds that it is too early to do so.
However, an Indian restaurant owner in Jalan Tengku Kelana, Klang, who gave his name as Gunalan, told theSun that most of his vendors and suppliers are planning to raise prices.
“My suppliers have not done so as yet, but they have indicated that prices of spices, vegetables and other raw materials that are not under price control will increase.”
Gunalan said the price increase is likely to affect the overall cost of meals at restaurants.
Marketing executive Rutheran Kaliapen, 49, said he is bracing for the worst as the diesel price increase will cause many businesses to raise the prices of their products and services.
“When the Sales and Service Tax came into effect on March 1, prices for tea, condensed milk, coffee, cocoa powder, and many other items went up. Now, with the new diesel price, I am worried about the potential impact on my limited funds.”
On Tuesday, Domestic Trade and Cost of Living Deputy Minister Fuziah Salleh said businesses must be careful when raising prices, and that the ministry was investigating complaints of profiteering by a concrete producer.
“The ministry will not hesitate to take action under the Price Control and Anti-Profiteering Act against those raising prices,” she said.
