Anti-profiteering
A. DEFINITION 1. What is meant by “Profiteering”? Making a high unreasonable profits. 2. Is the act of increasing the price by traders is considered as profiteering? No, not necessarily, because the offence of profiteering is by the increment of net profit margin of goods or services offered compared to profit on the base date. 3. What are the factors that cause profiteering? Factors for the occurrence of profiteering:
Traders raise prices not in line with the increase in the cost of goods.
Traders make a sharp increase in prices without any cost increase that causes the profit percentage to exceed the predetermined basis for the current year.
4. What are the factors that increase the price of goods in rural areas compared to urban areas? The factors that increase the price of goods in rural areas compared to urban areas are due to:
Increase in the cost of goods including transportation and storage of goods taken.
There is a concentration on the supply of goods by only a few traders.
There are many distribution chains before the supply of goods to traders in rural areas.
Lack of information or current legal information.
5. To what extent does KPDN regulate the increase in the price of goods? KPDN always conducts monitoring and enforcement to ensure that the prices of goods in the market are reasonable.
Among the efforts taken and to be improved are:
Implement strict enforcement under the Price Control and Anti-Profiteering Act (AKHAP) 2011, namely:
Enforcement against unreasonable profiteering or profit-taking by traders under the Price Control and Anti-Profiteering (Mechanism for Determining Unreasonably High Profits) Regulations 2018 which came into effect on 6 June 2018;
More aggressive monitoring and enforcement covers the entire distribution chain of goods and services nationwide under Ops Catut, Ops Rantai and Ops PASAR. This operation has mobilized all enforcement personnel of the Ministry nationwide to curb the issue of rising prices of goods in the market;
Issue a written notice under Section 21 of the AKHAP 2011 to any party found to have increased the price dramatically and significantly to obtain feedback and explanation in writing on the price increase to determine the occurrence of the profiteering element;
Enforcement of the Price Control and Anti-Profiteering (Price Marking of Goods and Charges for Services) Order 2020 which requires traders to display price lists or place price tags on goods and services sold;
Implementation of the Festive Season Maximum Price Scheme to control the prices of certain essential goods during major festive seasons in the country and the Determination of the Maximum Price of Chicken and Chicken Eggs for a certain period for the purpose of stabilizing prices; And
The maximum price is set for refined white sugar, face masks, Covid-19 Test Kits, LPG, Ron95 petrol and diesel to ensure that the price sold does not exceed the set price. However, the ministry will extend price controls on other essential goods according to conditions and needs.
Conducting engagement programmes to provide explanations, advisory services and cooperation with traders in understanding and complying with the laws enforced;
Implement collaborative measures with relevant Government agencies such as the Ministry of Agriculture and Agro-based Industry (MAFI) to ensure adequate supply and offer at reasonable prices under the National Living Action Council;
Increase the omnipresence of enforcement officers at consumer-focused locations to create a safe and ethical business environment.
Provide various channels of complaint distribution to facilitate the people to submit complaints related to price issues for action by the Ministry.
6. Is an increase in the price of goods considered a profit? No. The increase in the price of goods is a trigger for the mistake of levying. 7. Is the trader considered profiteering if there is a difference in the price of goods from different premises? No. The determination of profiteering is determined based on a comparison of the percentage of profit of goods based on the elements of the selling price of the goods and the cost of a trader or premises itself and not between premises. However, the price increase is the trigger for the profiteering check and an analysis will be made to see if the increase causes a percentage increase that exceeds the percentage of the trader in the current year. 8. Why is the price of goods in a hypermarket different from the price of goods in a grocery store? The price of goods in a Hypermarket differs from the price of goods in a grocery store because:
Buying goods in bulk or in large quantities at the hypermarket level when compared to retail stores that take small quantities from suppliers will cause the price of goods to be more expensive at the retailer level as buying in bulk will find discounts or cut of price.
The purchase of goods in cash by retailers and on credit by hypermarkets also causes higher prices charged by retailers to cover the cost of purchases or cash used.
9. What is notice 21 and what is the purpose of the notice being submitted to the trader? Notice 21 is a written notice issued to traders under Section 21 of the Price Control and Anti-Profiteering Act (AKHAP) 2011. The purpose of the notice is to be submitted to traders to obtain justification and explanation regarding the price of goods. Traders are required to provide relevant supporting documents to support any changes in costs and selling prices 10. Please explain the investigation process conducted by the KPDN Enforcement Division in the event of profiteering? The Enforcement Division will obtain information from traders through notices under Section 21 AKHAP2011 and conduct a profiteering analysis whether the increase made is illegal or otherwise. Additional Questions: 1. Does the act of a trader increase the price mean that the trader is profiting? No. The public's perception in relation to profiteering needs to be corrected. A high or expensive price does not mean that it is worth it. Similarly, the difference in prices between business premises also does not mean that premises that sell goods at a higher price are profitable. Users need to be informed consumers by making price comparisons before making a purchase.
Any action by traders to increase prices will invite an investigation by the KPDN Enforcement Di.,vision to determine whether profiteering has occurred. 2. What is the standard profit rate that each business needs to take to ensure operational continuity? Malaysia practices open trade. The marketing of goods is free and prices are determined by supply and demand (market forces). Therefore, a stable and sufficient supply of goods in the market is one of the main factors that affect prices as well as the cost of goods.
There is no law that sets a standard profit rate for goods traded or sold. Traders determine their profits based on the cost of procurement, costs incurred as well as the amount of goods sold.
However, KPDN has a basis through the mechanism currently in force to ensure that the profit determined or earned by a trader for a good sold is reasonable based on past profit determination information data. 3. If the cost of goods or the cost of selling increases, can the merchant increase the price of the goods? Traders are allowed to raise prices provided that the price increases are in line with the increase in costs and ensure that the current profit margin percentage cannot exceed the set basic profit percentage. 4. What factors contribute to the change in the price of goods in the market?
Malaysia is a country that practices a free and open market economic system where market forces play a role as a determining factor for fluctuations in the price of goods as well as being influenced by other internal and external factors. In the context of this free economy, influences and conditions in the market are important aspects of determining the price of goods. Other factors that contribute to price changes in the market are:
Demand and supply;
Price manipulation activities by middlemen;
Increased logistics and transportation costs;
The depreciation of the Malaysian Ringgit against the world's major currencies;
The attitude of greedy and profit-oriented traders; And
Cartel and monopoly activities.
5. What are the penalties for traders found guilty of price gouging? The penalties for traders found guilty of price gouging are as follows: I. For Non-Corporate Entities (Individuals)
First offense: A fine of RM 100,000 or 3 years of imprisonment
Second or subsequent offense: A fine of RM 250,000 or 5 years of imprisonment
II. For Corporate Entities (Companies)
First offense: A fine of RM 500,000
Second or subsequent offense: A fine of RM 1 million