YBhg. Datuk Muez Abd Aziz started his career in the public sector in 1988 as an Assistant Director at the Inland Revenue Department. Through the journey, Datuk Muez has held leadership responsibility in many areas including economic development and businesses management. In his public service engagements, he formerly served key positions at the Ministry of Entrepreneur and Cooperative Development, the Ministry of Agriculture and Agrobased Industry and the Ministry of Domestic Trade, Co-operatives and Consumerism. In addition, he was also involved with the Public Service Innovation Project (PIKA) in 2008/2009. Datuk Muez bin Abd Aziz was recently appointed as the Chairman of the Companies Commission of Malaysia (SSM) with effect from 9 January 2019. Datuk Muez holds a Master’s Degree in Economics from the University of Vanderbilt, Tennessee, United States.
Consumerism and the business ecosystem
Malaysia is doing remarkably well compared to its global peers, and currently we are in a a good position in the business ecosystem. Recently, we advanced nine places to 15th among 190 economies worldwide in the World Bank’s Doing Business 2019 Report, which based its rankings across key performance metrics in business regulations and ease of doing business. Another measure is consumer confidence—published by The Conference Board Global Consumer Confidence in collaboration with Nielsen, has ranked Malaysia 10th globally on the Consumer Confidence Index (CCI).
These two turning points are clear indications of how we are doing globally. But we need to take a pause and ask ourselves, how can this be improved? How can we further improve the quality and cost of living by tapping into the power of technology? Critically, how can we further optimise our society’s consumption?
Supply chain reinvention and an evolving global environment
Advances in technology, or the much hyped “disruptive innovation” are rewiring consumers and businesses. Today, both entities are more diverse than ever along the lines of business systems, markets, responses and interpretations. They are changing in reaction to the evolving environment around them.
One thing I should add, all these changes have been made possible by technology—new technologies becoming mainstream and replacing older ones. It’s important to note that our consumers can’t be viewed in isolation from the changing global market landscape. Also, these changes are radically remaking our society’s identity, traditions, economic structure and political will.
Weighing the government’s response to current consumer trends
I think what’s exciting about right now is the consumerled revolution enabled by digital technology happening at breakneck speed. It has really taken off. In a very short time, we are seeing a lot of consumer trends being transitioned to a more fluid online spending. It’s this swirl of marketplace dynamics that is heavily influencing the behaviour of today’s consumers.
As new technologies catch on, (apps, social media, geo-localisation software, etc.) consumers have become increasingly smarter and better informed. The combination of increased digital consumption and mobile technology is having a big impact on the retail industry.
To understand how, where and why consumers are changing, look no further than the power of information. Consumers have multiple sources of information at their fingertips nowadays and they demand a constant dialogue with brands. However, within this environment (increased information and scrutiny) businesses are facing intense competition to gain market share and traction. Meanwhile, in more established product categories, growth can be especially difficult to achieve on a regular basis.
There’s no question that social media and the people’s ability to mobilise information are increasing the pressure on the government and our businesses. In the years to come, the government has to be well prepared to address any complexity that may arise to protect our consumers and businesses. Yet historically, governments will be required to operate differently to deliver better services to the Rakyat. This doesn’t mean that technology is a threat, but it is heavily influencing the relationships between the government and its stakeholders—consumers, businesses and our communities.
Harmonising consumer protection
Amid this fast changing narrative, consumers nowadays can find and buy almost everything online from food delivery, travel, clothing, cosmetics, sports apparel to music and movies. So, it is increasingly evident that we need to prepare ourselves to face up to the formidable challenges posed by these nearly ubiquitous platforms such as e-commerce.
What we learned is that over 30 percent of the complaints we now receive monthly are about online trading. Next, price increase complaints are second in our record. This shows that our people’s participation in online trading has recorded a huge upward swing. In fact, we haven’t seen a shift like this in the last ten years.
In view of this, the ministry is taking various measures to harmonise consumer protection. For instance, recently, complaints that concern online trading have increased tremendously, averaging roughly around 2,400 cases every month. Most of the complaints filed were in connection with undelivered goods, order discrepancy and poor quality of goods.
Today, consumers can lodge their complaints to the Tribunal Tuntutan Pengguna Malaysia (TTPM) or the Consumer Claims Tribunal. Previously, consumers could only file claims below RM25,000. However, last July, an amendment was made to the Consumer Act 1999. All things considered, this resulted in the increase of the ceiling sum—now up to RM50,000. And this was done to protect consumers against fraudulent digital transactions.
We looked at other shifts as well to understand ways in which our consumers could be manipulated. Therefore, this is a timely alignment as the TTPM is under the purview of the act. We have also made it compulsory for merchants to register with the Companies Commission of Malaysia (SSM). When we factor in the trends showing up these days, it makes it a lot of sense—especially when we investigate our report cases.
Curbing high cost of living
For the last few years, much has been talked about today’s high cost of living. To cut through the noise, the government must intervene. In addition to this, the government is also continuously monitoring weaknesses and malpractices in the market from the presence of middlemen. Such inefficiencies among suppliers could lead to acute shortage of supplies and unfettered price hikes. In a free trade economy, prices largely depend on the economics of market supply and demand. With the relatively high cost of living, price hikes are a burden to middle income families.
Despite this, in support of the common good, we have adequate control and authority over the market to ensure we are able to protect consumer interest. Under the Price Control and Anti-Profiteering Act 2011, we have the authority to control the prices of essential items. Sugar for example, we regulate the price at RM2 per kilogram.
It is the cheapest in the region. If you compare with Indonesia for example, the price can go up to RM5 to RM6 per kilogram. Even though Thailand is one of the largest sugar producers, the price of sugar in the country is not that cheap. It is more or less the same with ours.
We control the price because sugar is widely used in everyday food and cooking. Just like fuel, we fix the pump price this year for RON 95 at RM2.08 per litre. Currently, it is among the cheapest in the region. It is imperative for the government to understand that fluctuating prices of these essential items can impose a huge strain on the Rakyat’s economy.
At the ministry, we are pulling all the levers we have at our disposal to make sure the Rakyat get adequate access to all these essential items. In addition, the ministry is mandated to strengthen the National Action Council on Cost of Living (NACCOL). It is a council set up to tackle on the ground issues regarding the country’s cost of living. For that, the council can give the government a greater monitoring capability.
Under the council, the focus areas are categorised into seven key clusters that impact the cost of living the most. Over and above this set of concerns, the clusters consist of food, housing, health, education, utilities, transportation and e-commerce.
Now, to a degree, two key parameters should be noted to evaluate future consumer trends. How consumers’ fundamental needs might change over time are typically fuelled by excitement and satisfaction. Although the picture is far more varied in the retail sector, we need to understand the characteristics of ‘new consumers’ where personalisation, speed, integrity and entertainment will influence spending habits and behaviour.
Moving to consumer education, we need to work relentlessly to educate our consumers. In general, consumers have the right to have access to information, essential goods, safe food, reasonable prices and so on and so forth. While we believe in a free market by design, oftentimes, people are the weakest link. In this context, empowering and educating consumers with the right knowledge will require greater effort from all stakeholders.
It involves both the public and private sectors, for example, government agencies like us, businesses as well as consumers associations and NGOs. This should be one of the measures of success when assessing our performance as the custodian of domestic trade development and consumer protection.
Protecting domestic trade
Protection isn’t simply consumers vs. traders. In our roles, we are not just protecting consumers, we are also protecting our domestic trade. Both are equally important as our SMEs consist of over 90% of business enterprises. New technologies and business models don’t just create opportunities, they also create perils. Apparently, our businesses are exposed to the turbulent trends that disruptive 4th industIt involves both the public and privaterial revolution technologies can unleash. Because no one knows exactly how these changes will eventually play out, we want to make sure we don’t lose revenue from our businesses losing profit when they stumble on being disrupted by new technology.
Alongside other agencies such as SSM and MyIPO, we are expected to be on the frontline of technology adoption to protect consumer interest and domestic trade, through registered IPs, patents and copyrights. Similarly, we need to measure what matters in terms of adopting new technology to improve our delivery.
Combine this with a supportive public sector, this will allow our businesses to attract more investors. Relevance is another way to think about it to improve the country’s ease of doing business. At the ministry, we’re really excited about new emerging technologies and how they will continue to improve consumerism and local businesses.
The desire in all of us is to have a greater degree of success for our SMEs. This is why we need to have a coproductive way of engaging them. Not only is there a dramatic rise in global competition, but when you think about new pockets of opportunity that can be created, we have a lot of catching up to do. To this end, we have our franchise development programs that help to market our SMEs’ products and services. We work closely with hypermarkets to earn more places for our local products on their shelves.
Supporting Sustainable Development Goals (SDG)
Speaking of Sustainable Development Goals, Goal #12 is about responsible consumption and production. The idea behind it is to promote resource and energy efficiency, sustainable infrastructure, improved access to basic services and the creation of green and decent jobs. All this points toward a better quality of life for all. This includes educating consumers on sustainable consumption and lifestyles. To do this, we need to provide our consumers adequate information. With respect to the objectives, the government can ill afford to engage in wasteful spending. Equally important is for the government to practice sustainable public procurement to achieve the appropriate balance between economic, social and environmental development.
For all of this, the challenge for the ministry is to engage an inclusive strategy to make sure that the supply of goods is continuously secured while working toward lowering the cost of living. As for the Malaysia Competition Commission (MyCC), the ministry is committed to promoting competition and combating anti-competitive practices in the marketplace. At the moment, the most pressing is curbing the rise of food prices.
The recently launched market review by MyCC discovered inefficiencies and potential anti-competitive conduct in selected food sectors. The review also presented a few recommendations on how Malaysia can become a self-sustaining nation. For example, diversifying our sources for specific food items and expanding our domestic industry can help reduce our dependence on imports.
But this requires a strong joint-effort from every stakeholder. Our businesses, perhaps, should exploit existing weaknesses in the market by tapping into the food industry and the ministry wholeheartedly supports this opportunity. In economic terms, we believe that more competition will increase market efficiency, promote innovation and accelerate economic growth.
Foresight and scenario planning
Currently, the ministry is strengthening the capacity and depth of its people in the fields of foresight and scenario planning. As such, we recently collaborated with MIGHT (Malaysian Industry-Government Group of High Technology) to develop the ministry’s strategic plan for 2021-2025. It is like the saying, ‘killing two birds with one stone’. This is why we are moving up a layer in our preparation as the risks of adopting a wait and see attitude are too costly to bear in the future. We need to make sure those who will be involved in the planning exercise are ready for change.
Given today’s challenges, our people will not only be using foresight tools to explore future scenarios and translating them into action, but they are also expected to equip themselves with strategic thinking skills. Going forward, these skills are critical considering the rise of the 4th industrial revolution. This will be a familiar theme that will characterise our effort to prepare our people to contribute productively to the nation’s development. At the same time, this will also harness Malaysia’s commitment to global causes, such as the SDGs and national development plans. In the race to build competitive global advantage, we need both sides of the strategies we formulate to be executed really well. One side of it is the planning of effective and scalable strategies. The other is the governance and integrity of the strategies.