KUALA LUMPUR: The Ministry of Domestic Trade Co-operatives and Consumerism (MDTCC) has requested at least one retail association to provide a signed undertaking not to increase prices without reasonable justification just days before the goods and services tax (GST) comes into force on April 1, 2015. 

Members of Malaysia Retailers Association (MRA), who number over 100 representing thousands of stores, have been approached by the ministry to pledge their support.  

Based on the documents sighted by The Edge Financial Daily, the undertakings include “The GST will not be used as an excuse to manipulate or increase price”, “... that any increase or decrease of prices will be in accordance with the GST” and that retailers “will undertake to be ethical in conducting business.”  

This move by the government has received mixed response from retailers who say that market forces should determine the pricing of goods. 

Interestingly, the Malaysia Retail Chain Association (MRCA), which has 270 members, has not been asked to make a similar pledge. 

Meanwhile, MRA deputy president James Loke said, “As MRA, we will support the government. We are getting others to do the same and members are responding positively as the retailers also have no intention of increasing the prices if possible.” 

He added that this also goes towards showing that they are reasonable as retailers. 

Datuk Wira Ameer Ali Mydin, who is the managing director of Mydin Mohamed Holdings Bhd and a member of MRA, said the pledge helps instil consumer confidence. 

Moreover, retailers can adjust prices as long as they are within the ambit which is provided for under various laws. 

These include not increasing the net profit margin for the period of 18 months effective Jan 2, 2015 to June 30, 2016 except in situations provided under the Price Control and Anti-Profiteering (Mechnanism To Determine Unreasonable High Profit) (Net Profit Margin) Regulations 2014, as well as keeping and maintaining records when required in accordance with the Price Control and Anti-Profiteering Act 2011. 

A retailer who declined to be named said the requirement to sign an undertaking could be a strategic move by the ministry so that retailers will think twice before increasing prices.

This article first appeared in The Edge Financial Daily, on March 26, 2015.