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KR1M 2.2 will fail again

Written By Wadah Baru on Isnin, 29 Januari 2018 | 10:55 PG

By TK Chua
 
It does not matter that the Kedai Rakyat 1Malaysia (KR1M) has launched a version 2.2 or any future version. To me the consequences will be the same.

It is just another case of doing things without thinking, and using government money for nothing. How we can have a government that is so stubbornly inept is simply beyond me.

How would KR1M 2.2 be any different from the previous version? How could it be selling products (presumably with similar quality) 30% to 50% cheaper?

How does Domestic Trade, Cooperatives and Consumerism Minister Hamzah Zainudin know that the people’s response to KR1M 2.2 would be favourable?

Did he base the response on a sustained basis or was it just a “flash in the pan” thing during the initial discount period?

Also, how can an occasional funfair-like sale change the cost of living for the people at large?
It is almost impossible for KR1M 2.2 to sell goods 30-50% cheaper unless the following three things take place.

First, KR1M 2.2 is super-efficient when compared with other retail chains.
Second, KRIM 2.2 is more altruistic, willing to make much less profits than others, and, third, KR1M 2.2 is heavily subsidised by the government.

It is not difficult to imagine how all the three factors above are neither viable nor sustainable.
To me, this is the second round of good money being thrown at a bad programme. It is only a matter of time before we see who will be proven right and wrong.

In a functioning market economy, it is the job of the government to make it work more effectively. Direct intervention by mandating that a certain number of stores be set up in certain locations is not going to work.

On the other hand, the government must free up supply chain monopolies, allow easy entry and exit as well a encourage greater competition at all levels.

How can the government and KR1M 2.2 know whether a new retail store is needed in a new location? I think an entrepreneur would be able to identify any opportunity much better, not the government or KR1M 2.2.

Sometimes, I think it is better for the government to do less. Setting up stores requires budgetary allocations and additional subsidies which take up tax revenue.

If government programmes are not effective, it could actually increase the cost of living. Hence, the government doing less could actually lower the cost of living.

The cost of living is the consequence of many factors, not just retail stores. The government must encourage new players, not become a new player themselves or mandate that someone become a new player.

KR1M 2.2 will fail again because it has no economic underpinnings.
Incidentally, what has happened to the Mara Digital Malls? Can the relevant ministry provide an update on this?

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