Speaking to FMT, Socio-Economic Research Centre executive director Lee Heng Guie said businesses should be allowed to make profits so they could grow and invest for expansion. Expansion would in turn create more employment opportunities, he added.

The APM, which comes under the Price Control and Anti-Profiteering Act 2011, was introduced when the goods and services tax (GST) came into force in April last year. It was meant to be a temporary anti-profiteering measure and was originally supposed to end last June.

“The idea of the APM is to prevent businesses from taking advantage of the GST to raise prices,” Lee said. “While it has noble intentions, it creates a host of other problems which will ultimately affect consumers.”

Under the APM, a business which is reported for alleged profiteering will face an inquiry by the Domestic Trade, Cooperatives and Consumerism Ministry. The authorities would then check the amount of profit the business was making on a product at the time of the report and compare it with the amount it was making at the time the GST was introduced.

“As an example,” Lee said, “if you made a RM10 net profit from a plate of spaghetti when the GST was first implemented in April 2015, today you cannot make more than RM10, even though various costs have gone up in the past year.”

Lee said the crux of the issue was that “excessive profit” could not be defined as there were too many factors affecting profit margins, such as fluctuating operating costs, supply and demand, currency values and changes in the weather and in technology.

“A mechanism like the APM is a stumbling block to investments as investors will want to take their money to freer markets where regulators do not try to set how much profits they can make,” he said, adding that existing laws against profiteering were sufficient.

Lee said it was fair to control prices during festivities and emergencies like floods and to enforce the law against unfair business practices, such as hoarding.

“However, when you suppress prices artificially, new business won’t want to come in. Then you will have less competition between businesses and existing ones will become monopolies.”

He said monopolies would reduce consumer options, lower commitments to quality and lead to high prices.

It would be more appropriate to let consumer power ensure fair pricing than to depend on the APM, he added.

“Ensuring fair pricing requires the commitment of businesses, consumers and regulators,” he said. “One party alone cannot ensure balance.”