A chicken and egg situation

WHICH – in terms of rising prices – came first, the chicken or the egg? For the owner of a cafe in Kuala Lumpur famous for its fried chicken and butter cake (requiring many eggs), it is the egg.

After Pakatan Harapan won GE14, he noticed that egg prices rose drastically. It was an increase of about 20% to 30% from May last year to February this year. The price gradually dropped after March.

The increase affected his profit margin.

He coped with the rising cost by switching off the air conditioner when there were no customers and reducing operating hours.

The price increase in chicken meat was not too drastic. Although the cost has increased, the cafe owner didn’t raise the price of his fried chicken as he didn’t want to “rock the boat”.

He thought that after Pakatan’s victory, food cost would go down – not immediately but gradually, within a year. Much to his chagrin, it has not.

“These were promises that we saw in PH’s campaign material which we were bombarded with day and night. Invoke and DAP said so! They promised that petrol price will go down and highway tolls will be abolished once they were in power,” he said.

Instead, to him, “PH” now stands for “price hike”.

“After one year in power, there is no reduction in prices of local and imported items (such as butter, cheese and chillies). Things are getting to be more expensive,” he said.

For example, imported chillies used to be RM9 per kilo. Now they are RM15 per kilo.

He also noticed fewer customers were patronising his cafe.

“I expected business to improve. But it hasn’t. There’s a decline in customer spending. They are holding back and not spending. They say things are expensive. They see the PH government in trouble because of debt. And they foresee that the government can’t improve the economy soon,” he said.

The cafe owner is worried about the Malaysian economy.

He is not alone.

According to a study, What Worries Malaysian Businesses, by Ipsos Business Consulting (Ipsos BC), Malaysians are less confident about the economy today in comparison to their confidence level immediately after GE14.

Ipsos BC, which is the business advisory division of Ipsos, a world-leading market research and strategy consulting company, engaged with over 250 businesses across Malaysia to understand their views on the performance of the government after one year of Malaysia Baharu.

Ipsos noted that while more than half of Malaysians still believe the country is on the right track, however, the shift towards the wrong direction perception is gaining momentum.

In an earlier study, What Worries Malaysian Businesses, 100 days after the Pakatan government came into power, businesses were expecting a robust economic performance.

Almost a year later, businesses gave an average rating of 2.91 – based on a scale of 1 (not at all satisfied) to 5 (very satisfied) – versus an expectation of 3.72 – based on a scale of 1 (least optimistic) to 5 (most optimistic) – for the government’s performance in developing economic policies.

Generally, said Ipsos, businesses found the government’s performance satisfactory but below initial expectations.

As it is for the cafe owner, the number one worry among Malaysian businesses was the possibility of a local economic slowdown.

“The slowing down of the local economy is a consistent worry across all business segments. The performance of various indicators such as the Bursa Malaysia KLCI Index, declining palm oil prices, fluctuation of the ringgit, as well as the slowing down of the construction and housing sector have led to some anxiety for Malaysian businesses,” Ipsos said.

“The economic headwinds facing Malaysia at the moment, coupled with the lack of clarity of a strong economic game plan have affected the confidence of Malaysian businesses.”

Businesses, according to Ipsos, want the government to focus on stabilising local currency, ensuring consistent policies, and improving financial support for businesses in the next one year.

“The key areas that businesses want the government to focus on in the next one year correspond to their worries. The top three areas are on stabilising the ringgit, ensuring consistent policies, and improving financial support/assistance for businesses (such as grants, funds, and loans),” it said.

What the businesses want is for the government to have a clear economic game plan.

“What truly matters for businesses is to have the confidence that the government knows how to drive the economy forward and is taking the necessary actions towards that direction,” Ipsos said.

For the cafe owner, what he wants is for the price of eggs and other food items to go down as promised by Pakatan politicians.

He also wants consumer confidence to return so that his food business can stay afloat. And, yes, he wants a stronger ringgit too so that imported goods will be less expensive.

When the price of eggs goes down, what comes next is a higher margin.

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