LETTER | Govt must walk the talk on monopolies

LETTER | When Anwar Ibrahim came into office as the 10th prime minister, he vowed to go against monopolies and monopolistic tendencies in certain industries.

This was refreshing because monopolies usually have government leaders bending to their will because of their sheer size and dominance in the economy.

Monopolies can emerge naturally in certain industries and should not all be painted as bad. For example, monopolies can guarantee industry stability that ensures stable employment.

More often than not, governments create monopolies to ensure certain economic goals are met. For example, in Malaysia, we have Bernas for the import of rice, landline with Telekom Malaysia, and motor vehicle inspection with Puspakom.  

However, when monopolies do not perform despite the advantages accorded to them, who suffers? It is the consumers, the rakyat.

The system is so entrenched that monopolies only get bigger and they block potential entrants into the industry.

Moreover, there are plenty of studies that have shown how monopolies stifle innovation and do not maximise their potential due to complacency. Rent-seeking behaviour is also rampant in monopolistic industries because there is predictability.

Competition paves the way to innovation and keeps companies on their toes. In order to rebuild the Malaysian economy and enhance its resilience against future challenges, the government must have the political will to make tough decisions.

While breaking existing monopolies may take a long time, the government led by Anwar must start now.

It must also strengthen regulations on competition law to prevent the creation of new monopolies. But more importantly, it must have the political will to resist making new ones.

I follow the developments surrounding the sugar industry which is an oligopoly - or a duopoly to be exact.

There are media reports which state that a prominent Malaysian businessperson with deep ties to the government and existing interest in the sugar industry is interested in buying over the market leader.

The recent sugar shortages in certain states should provide ample warning to the government that this very idea should never be entertained. A duopoly is already difficult, what more a monopoly.

The government should not be held ransom especially in critical industries such as sugar. Instead it should encourage competition and focus to build up capacity to support the industry to grow, maximising potentials.

Therefore, it is a no-brainer that the prime minister should shoot the idea down, lest it makes a mockery of his words and undermines the credibility of the coalition government.

Malaysia needs new ideas and a strong vision to rebuild the economy. Leaders must resist the temptation of reaching out to old playbooks such as creating monopolies and encouraging anti-competitive behaviours.

We must open up the economy and grow our industries. Most importantly, we need our leaders to show leadership and do the right thing. Walk the talk and prioritise consumers and not big business interests.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.