Enforcement of Price Control and Anti-Profiteering

Frequently Asked Questions on the Enforcement of Profiteering under Price Control and Anti Profiteering (Mechanism to Determine Unreasonably High Profit for Goods) Regulations 2016.

1. What is the enforced legislation to determine the unreasonably high profit for goods?

The enforced legislation to determine the unreasonably high profit for goods is the Price Control and Anti-Profiteering (Mechanism to Determine Unreasonably High Profit for Goods) 2016

2. When do the Price Control and Anti-Profiteering Regulations (Mechanism to Determine Unreasonably High Profit for Good) 2016 come into force?

The Regulations of the Price Control and Anti-Profiteering Mechanism to Determine Unreasonably High Profit for Goods) 2016 come into force with effect from 1st January 2017.

3. What is the purpose of this Regulation?

These Regulations are created to protect consumers from the unethical traders and to prevent the trades from making unreasonably high profit or profiteering.

4. Is this Regulation benefits the consumers in dealing with the price issues?

This Regulation will restrict the traders from taking advantages on consumers by excessively making profits from products and to ensure the ethical business practice for the benefit of the consumers at large.

5. Are all types of goods and services subject to these Regulation?

Only two classes of goods are subjected under this Regulation, which are food, beverages and household items (excluding cosmetics). This Regulation is not applicable to services.

6. What are the goods that are subject under this Regulation?

2 classes of goods which are subjected to this regulation are as follows:

  • Food & Beverages such as Prepared Food, Rice Grains, Bread and Cereals, Flour and Wheat, Meat and Chicken, Fish, Fresh or Processed Seafood, Milk, Cheese and Eggs, Oil, Fruits, Vegetables, Sugar, Jams, Honey, Chocolate, Spices and Beverages.
  • Household Items such as Laundry Detergents ( Liquid and Powder) , Fabric Detergents ( Bar), Fabric Softeners, Dishwasher Detergents ( Liquid and Paste) , Bathroom Cleaning Products, Bowl Cleaner Detergents, Floor Cleaning Products, Window Cleaning Products, Glass Bleachers, & Dirt Removers, All types of Brushes, Sponges, All types of Floor Sweepers & Mop, All types of Mosquito Repellents, Insect Aerosol, Primary Battery (Used Only Once), Garbage Plastics, Candles (White), Kitchen Towels, Clogged Pipe Cleaners and Air Fresheners.
  • Personal Care Products such as Toothbrush ( Excluding Electric Toothbrush), Toothpaste, Floss (Thread), Talcum Powders, Lotions, Creams, Gels ( Facial, Body, Hand, Leg), Facial Cleansers/ Scrubs, Deodorants, & Antiperspirants, Perfumes / Body Mists, Hair Oils/ Creams and Gels, Body Soaps, Body wash, Shampoos and Hair Conditioners, Pampers (Baby and Adult). Women Sanitary Pads , Toilet Rolls, Tissues, Wet Tissues, Soaps, Shaving Creams & Foams, Mouthwash, Shavers & Blades (Excluding Electric Shavers)

7. Is this Regulation applicable to perishable goods?

This Regulation applies to perishable goods only if they fall under two categories of goods which are subjected under this Regulation, for instance food and beverages as well as household items.

8. Is the application of this Regulation applicable to all levels of business?

This Regulation applies to all business levels including manufacturers, importers, producers, distributors, wholesalers and retailers.

9. Does the Ministry provide guidelines in regards to these regulations?

The Ministry has prepared a Guideline on Mechanism to Determine Unreasonably High Profit and these guidelines can be accessed through the Ministry’s Website at www.kpdnkk.gov.my

10. Does the Ministry provide ample time in order to enable traders to prepare themselves for this Regulation?

A transitional period (grace period) of 5 months commencing on 1 January 2017 and ending May 31, 2017 has been given by the Ministry to the traders for the preparation of compliance with this Regulation.

11. Does this Regulation specify a certain amount of profits that a trader needs to take into account?

This regulation does not specify any profit rate of goods sold that could be taken by the traders, this regulation only control the traders so that they did not excessively making profits from every products offered or sold to the customers by the means of mark-up percentage (%MU) or margin percentage (%MG)

12. What is meant by mark-up percentage and margin percentage?

Mark-up percentage (%MU) is the percentage of profit rate the trader needs to calculate by taking account the cost of goods meanwhile, margin percentage (%MU) is the  percentage rate of profit calculated by taking into account the selling price of the goods.

13. What is the method used in calculating the mark-up percentage and margin percentage?

The formula used to calculate %MU/ %MG is as follows:

Mark-up Percentage (%MU) Margin Percentage (%MG)
SP – C/C x 100 SP – C/SP x 100
SP = Sale Price                                        C = cost

14. What are the costs to be taken into account for this Regulation?

The costs that should be taken into account are the prices paid for the acquisition or production of goods, and the cost incurred in selling the goods which to be taken into account in determining the selling price of the goods. Business expenses cannot be accounted as a cost.

15. If % MU /% MG ​​earned by a trader is high, is it considered to be profiteering under subsequent Regulation?

Higher% MU /% MG ​​values ​​will not be considered as profiteering. According to the Regulations, profiteering occurs when the current % MU /% MG ​​of the goods sold or offered for sale exceeds the % of the MU% / MG% of goods that have been determined on the first day of the financial year or particular calendar year.

16. What is meant by basic % MU / %MG and how to determine it?

The basis % MU /% MG ​​(PA) is % MU /% MG ​​for a good is determined by the trader on the first day of the financial year (FY) or a certain calendar year (CY) of a business. The basis calculation is based on the formula sets out in the Regulation as follows:

PA = X1 + Y

Whereby ;
X1 = %MU/%MG on the first day of FY/CY the first before a particular FY/CY
Y = the value of T1 or T2, which one highest
T1 = X1 – X2
T2 = X2 – X3
X2 = %MU/%MG on the first day of FY/CY the second before a particular FY/CY
X3 = %MU/%MG on the first day of FY/CY the third before a particular FY/CY

 

17.  What is meant by current %Mu / %MG? And how to determine it?

Current % MU (PB) and current %MG (PC) is %MU/%MG for goods on the date when the goods are sold on any dates throughout a particular year. The example of the calculation is illustrated as the following:

Example: On 15th July 2017, Product A was sold at RM10 and the cost of this product is Rm5. The Financial Year is on 1st January and ending on 31 December every year, and also the business has been operated from the year of 2002. Therefore, the calculation of current %MU/%MG for Product A on 15th July 2017 is as the following:

18. How is a trader considered to be profiteering?

A trader is deemed to be profiteering when the mark-up percentage (% MU) or margin percentage (% MG) on any of the date throughout the current year exceeds the base mark-up percentage or margin percentage determined on the first day on that particular year.

19. Is it an offence if the price of the same goods is increased by the traders in the same FY/CY?

The trader can raise the price on the same goods in the same FY/CY. However, current %MU/%MG should not exceed the base %MU/%MG of goods determined on the first day on a particular FY/CY.

20. How to determine the %MU/%MG on the first day if there is a sale take place on that day?

Determination of the %MU/%MG on the first day if there is sales take place is by taking into account the selling price on the date before the sale takes place.

21. How to determine the %MU/%MG on the first day if a trader introduces a new product with introductory price?

Determination of the %MU/%MG on the first day if the trader is introducing a new product with introductory price is by taking into account the selling price after the introductory price ends.

22. How to determine the %MU/%MG on the first day if the trader sells or offers to sell the product for the first time after the first day?

Determination of %MU/%MG on the first day if the trader is selling or offering to sell the product for the first time after the first day is by taking account the selling price of the goods at the first time that the goods are sold or offered for sale.

23. How to determine %MU/%MG on the first day if a trader sells the goods at a price lower than its cost (Loss Leader)?

Determination of% MU /% MG ​​if the trader sells the goods at a lower price than the cost (Loss Leader) on the first day should take into account the selling price on the date the item is sold for more than the cost.

24. How to determine %MU/%MG on the first day if the business does not operate on the first day of the FY/CY?

Determination of %MU/ %MG if the business does not operate on the first day of FY/CY should take into account the selling price on the first day the business begins its operation.

25. Is online transaction subject to this Regulation?

Online Transaction is subjected under this Regulation when the goods involved fall within the two categories of goods which are food and beverages, household items and also personal care.

26. Can %MU/ %MG be set differently depending on the location of the premises?

The trader is allowed to set %MU/%MG differently depending on the location of the business premises if it involves a different costs with the provided that current %MU/%MG does not exceed the base %MU/%MG.

27. Can trader increase the current %MU/ %MG to be more than the base %MU/%MG as the selling price is still low as compared to the market price?

The trader cannot raise the current %MU/ %MG to exceed the base %MU/%MG even though the selling price is still low as compared to the market price because the determination of profiteering is done based on the comparison of base %MU/%MG with the current %MU/%MG of goods sold or offered to sell by a business, and not the comparative of %MU/%MG between a business and another business.

 


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