NST Leader: Closing the 'leak' in gas subsidy abuse

New Straits Times

2 days ago

IT comes as no surprise that retailers are once again manipulating subsidies. This time, large commercial kitchens and hawkers have been found misusing the supply of subsidised liquefied petroleum gas (LPG) cylinders meant for household cooking.
Following this discovery, the government, effective May 1, prohibited restaurants and eateries, including hawkers, from using the subsidised LPG cylinders, priced at RM26 a unit. Instead, they were ordered to use purple 14kg cylinders at RM70 per unit.
Additionally, kitchens must apply for an annual permit if they need more than three cylinders. From May 1 to 20, Domestic Trade and Cost of Living Ministry enforcement officers seized RM883,000 worth of goods from eateries found to be violating the directive.
Why the ban? In exploiting an illegal loophole, these commercial kitchens bought the subsidised cylinders in bulk by deceiving mobile gas sellers into delivering them to homes under the false pretence of household use.
The cylinders are then transferred to the commercial kitchens. The lower gas price leads to higher profit margins for these eateries, allowing them to sell dishes at RM28 or more, when the same dish might cost only RM8 to RM10 at food stalls.
Commercial kitchens had been exploiting this loophole for years, but the current enforcement only partially addresses the problem. Previously, operators rarely absorbed spiked operating costs and instead passed them on to consumers.
In this case, commercial kitchens have conveniently "blamed" the higher cost of their cuisine on the government's "subsidy withdrawal", which did not happen. Food and beverage industry trade representatives are appealing for understanding, requesting time to adjust to the new commercial LPG prices while also contesting the ongoing seizures.
While this is happening, what actions can curb rising eatery costs? Food businesses could adjust menu prices, optimise cooking practices and explore alternative energy sources. Waste reduction and efficient supply chain management can also reduce costs.
Crucially, any price adjustments should be communicated to customers. Commercial kitchens could also strategise by bulk purchasing, negotiating better supplier rates and optimising deliveries, especially e-hailing orders.
They could use customer loyalty programmes and discounts to encourage repeat business during inflationary periods.
While the food business overhaul incurs costs, the government could assist by setting commercial LPG prices to start at the RM30 to RM50 range, then gradually raise them.
Also, government subsidies or programmes related to LPG and other energy sources should be easily available. If commercial kitchens can cleverly source cheaper LPG cylinders, they can apply similar creative skills to reduce fuel costs, ultimately keeping delicious cuisines affordable.