Wednesday, October 03, 2012

Budget 2013: KR1M Gets RM386 Million!

Why is the Federal Government helping Mydin make astronomical profit to set up 57 Kedai Rakyat 1Malaysia (KR1M) in Sabah and Sarawak with RM386 million?

The Prime Minister proudly announced that the Federal Government will allocate RM386 million to set up 57 Kedai Rakyat 1Malaysia (KR1M) next year to “ensure the prices of essential goods in Sabah and Sarawak as well as in Labuan are sold at lower prices”.

We are in complete support of any measure by the Government to reduce the prices of goods and services in East Malaysia, especially over the longer term to ease the burden of Malaysians living in these states.

However, the approach taken by Datuk Seri Najib Razak is clearly designed to profit only Mydin Mohamed Holdings Bhd as the allocation goes direct to the company to set up these stores.

Based on 57 proposed new outlets in Sabah and Sarawak with a budget of RM386 million, each retail shop will average a whopping cost of RM6.77 million!

This is manifold higher than what was announced in the 2012 Budget where RM40 million was allocated to subsidise Mydin to set up 85 stores, where each store will average RM471,000.  Why is there a difference of RM6.3 million for each store set up between 2012 and 2013, especially since the Government claims that the rate of inflation is only 1.9%?

If the amount of money allocated is expected to also “bear the cost of delivering products from Peninsular Malaysia to Sabah, Sarawak and Labuan including the interior areas” then why is it that this benefit will not be extended to all other shops in Sabah and Sarawak offering these “basic necessities”?

In fact, since the RM386 million grant or subsidy is given only to Mydin, the Government is in effect killing off all of Mydin’s competitors – from big hypermarkets to small mom-and-pop shops.  Mydin will have the monopolistic right to sell certain products at substantially cheaper prices than its competitors due to the exclusive RM386 million from the Federal Government.

What is worse is that because there is no transparency in the subsidies provided to Mydin, and no “competition” in the exercise. Malaysians will not be able to ascertain if we are getting our value for money from Mydin, or whether a significant chunk of this subsidy will be siphoned by the company, instead of being passed on to consumers.

We call upon the Government to make available the RM386 million all small retail outlets already in existence throughout Sabah and Sarawak to ensure that the maximum number of retailers and consumers will benefit from the programme to sell basic necessities at lower prices.  There is absolutely no need for the Government to sponsor its crony to open up new shops in these areas to compete unfairly and kill of local shop-owners.

We are in fact rather disgusted by the fact that even in a programme ostensibly designed to lower the cost of living of the poor, the Barisan Nasional Government chosen a mechanism to profit its cronies at the expense of the man-on-the-street.

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