The recent surge in cement prices has triggered fears that housing prices will be pushed further upward, causing house buyers to bear heavier housing mortgages in future and making houses inaccessible to many.
The latest spike has been shockingly steep. The prices for 50kg packs has shot up by 40% from RM11-12 to RM15-16.
Skyrocketing cement prices will invariably send construction cost higher, and already some developers have made it very clear that they will mark up the prices of their properties.
The question is: how much higher will they be?
REHDA Kedah/Perlis has indicated that property prices in the northern region may go up by 5-10%!
Currently the global market is still overshadowed by the US-China trade war. In the absence of positive leads, domestic economic activities remain slumpy, and the surge in cement prices is bound to deal a further blow on the local housing market as well as the overall economy.
REHDA has urged the government to step in to control the prices of cement, a primary construction material.
The industry is of the opinion that the rise of cement prices has been a result of monopolized production.
Monopoly means lack of competition, making it difficult to strike a balance for goods prices through the supply-demand equation, but almost wholly in the manipulating hands of the monopolizers.
Where such monopoly exists, the suppliers will have a powerful say in fixing the prices while consumers are invariably on the losing end. This is why anti-trust laws are implemented in many developed countries.
In addition to cement, monopoly is also evident in the supply of many other consumer products and services such as sugar and electricity.
Due to lack of competition, prices of these products and services will not see downward adjustments despite changes in the market.
For instance, when global coal and natural gas prices come down, domestic electricity tariffs still remain the same.
There has been no follow-up since Prime Minister Tun Mahathir indicated three months ago that the government was mulling lowering electricity tariffs.
The same thing happens to the local white sugar market.
The drastic fall of international raw sugar prices in recent years have unfortunately not been reflected in white sugar prices in the Malaysian market. Local consumers have not benefited from the fall of international raw sugar prices.
The issuance of white sugar import permits by the domestic trade and consumer affairs ministry to eight food manufacturers in Sarawak marks a first step in breaking such monopoly.
Meanwhile, the ministry should also consider issuing import permits for West Malaysian food manufacturers in a bid to further eliminate the phenomenon of monopoly. This is to ensure that consumers will gain access to cheaper white sugar.
From the angle of market economy and consumerism, monopoly is a very unhealthy phenomenon that will jeopardize the consumers’ rights.
Opening up the market and encouraging healthy competition are key to lift the overall economy and boost the people’s well-being.