Latest news with #RM883
New Straits Times
3 days ago
- Business
- New Straits Times
NST Leader: Closing the 'leak' in gas subsidy abuse
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.
The Star
26-05-2025
- Business
- The Star
Eateries feeling the heat
Going purple: Under new rules, restaurants have to phase out the use of household gas cylinders. — MUHAMAD SHAHRIL ROSLI/The Star PETALING JAYA: As of May 1, all eateries, including hawker stalls, have been barred from using household subsidised gas cylinders. Instead, they have to use new purple 14kg commercial gas cylinders, which cost RM70 – almost three times the price of household subsidised gas cylinders, which are sold at just RM26. Industry players are also required to apply for a yearly permit if they want to have more than three such cylinders. The Domestic Trade and Cost of Living Ministry is now cracking down to ensure that the food and beverage industry complies. On May 1, the ministry kickstarted Ops Gasak to combat the misuse of liquefied petroleum gas (LPG) subsidies. Since then, officers have seized RM883,000 worth of goods from eateries deemed to have broken the rules. On May 23, minister Datuk Armizan Mohd Ali, who said the LPG subsidy cost the government RM3.4bil, clarified that premises using more than 42kg of LPG - or more than three cyclinders - must apply for a permit under the regulations of the Control of Supplies (Amendment) Act 2021. The government had planned the switch to commercial gas in 2019 but had put the enforcement on hold. Industry players, however, are still unclear about the requirements surrounding the implementation, warning that a switch to commercial gas could lead to a new round of price hikes. Petaling Jaya Coffeeshop Association president Keu Kok Meng said they are willing to comply with the implementation, but what comes with the switch to the more expensive gas must be made clear. 'The government must announce what comes with the switch of gas cylinders. This is because food at coffeeshops are priced competitively low. This change will affect our costs. 'We understand where the government is coming from but give us time to change and adapt,' he told The Star, adding that they have been given notice by their gas suppliers to apply for permits. He added that based on a survey of a noodle shop selling 70 bowls using two cylinders in a day, the price of noodles will see an increase of more than RM1 per bowl. Malaysian Indian Restaurant Owners' Association (Primas) president Govindasamy Jayabalan said they have written to the ministry to seek clarification on the matter. He also urged the ministry to give them some room to adapt instead of issuing summons or seizing items in their operations. 'The 50kg commercial gas cylinder was not practical to be placed inside the premises, so the 14kg commercial gas cylinder is a good move but the cost is high. 'On average, a small restaurant uses about 100 cylinders per month, so that comes to RM2,600, but now we will have to fork out RM7,000. So, you can see that cost will eventually translate to the price of food. 'We don't mind the switch but we urge the ministry and the government to hear our pleas, especially with the increase in the cost of raw materials. We were able to accommodate when they removed the egg subsidy, but this is too high,' he said. From May 1-20, a total of 74 cases were recorded with a seizure value of RM 883,000, the ministry's enforcement director-general Datuk Azman Adam said. He added that the ministry would use enforcement to ensure no one diverts subsidised goods meant for the people.
