Cement price manipulation?

Cement price manipulation?
11 June 2004

The Malaysian Ministry of Domestic Trade and Consumer Affairs will launch an investigation into allegations that the prices of cement are being manipulated by unscrupulous transporters and distributors.  Datuk Mohd Shafie Apdal This stems from a complaint by the Building Materials Distributors Association of Malaysia that manufacturers were losing some RM150 million annually due to the manipulation by a minority group.

At a ministry-private sector dialogue session in Kuala Lumpur on June 10, the association president Lim Ann Kok told the minister that cement prices, which are government-controlled, were susceptible to various manipulation.  Presently, prices are computed based on destinations. Lim told FinancialDaily the transporters and distributors who were manipulating the prices were not members of his association.

He said the stipulated prices, together with the wide differences in transport rates to various destinations, were open to abuse and manipulation by the unscrupulous transporters.  The association proposed that the government- controlled price be revised from ex-destination to ex-factory.  It suggested a standard RM160 per tonne as the ex-factory price, and not any higher regardless of the destinations.

An industry player says the transporters are intentionally claiming higher charges.  Such practices are said to be common in the industry.  ³Everybody talks about it as it is known to be a scam in the industry, but no action has been taken,² the source says.

Minister Datuk Mohd Shafie Apdal said his ministry would look into the matter. ³I will look into the proposal to be submitted by the association,² he told reporters after the dialogue session.  ³If it enables us to ensure that the distributors will not benefit excessively, then we can price ex-factory. ³That would be a good move to overcome the problem. I will look into it.²

Published under Cement News