In these times of subsidy rationalization, increasing prices of food and essentials and the soon to be implemented new Goods and Services Tax, one critical effort is lacking; The need to undertake consumer education extensively.  Consumers often blame government when prices up; not understanding that substantially prices of goods and services are determined by the market.  This scenario is made worse by senior government officials giving assurance that the “government will manage prices” and worse for the government to claim credit when prices do go down on any items. For if the government takes credit when prices go down; shouldn’t than they take the blame when prices go up.  Or is the government itself lacking in understanding  about how the market works? It is ridiculous and an insult to consumer intelligence when the government takes credit when prices go down but blame it on market forces when prices go up.

To face these challenging times, consumers need to understand the workings of the market; how the market works, how prices are determined and the limitations of the government role in determining market prices. Consumers should more importantly realize that they are not helpless or victims of the market.  They can make choices, at least to some extent, to manage their consumption and expenditures. Through their purchasing patterns, to some extent at least, they can influence the market.

The purpose of consumer education then is to empower consumers with the knowledge, skills and the right mindset to face the challenges in the market. Firstly, the consumer, through consumer education, will truly understand the market and how prices are actually determined.  Further in relation to prices, consumers will be able to understand the many factors, both locally and globally, that affect prices.  This would include increasing demand for food, the changing consumption patterns of newly emerging economies, coupled with the decreasing supply of input factors such as water and land. The most damaging and potentially most dangerous impact of prices would certainly be climate change which is already affecting food production, throughout the world. 

Secondly, though consumer education, consumers would learn how to better manage their consumption and their expenditure patterns. Consumer education would emphasize on practical steps and measures that consumer could do to reduce expenses. Example of practical measures would include price comparisons, changing from branded to generic products, consuming more fruits and vegetables rather than processed food and planning your purchases when one goes shopping. Another important component of consumer education would be personal financial management. Topics to be covered would include tracking one’s expenses, planning and budgeting, managing one’s credit card, prices comparisons when making purchases and the importance of savings and retirement planning.
Thus consumer education would emphasise both on understanding the basics, that is about the market and prices as well as provide knowledge and skills to better face the challenging scenario.

This effort to empower consumers through education is lacking.
Often bureaucrats lack the understanding about the predicament and challenges faced by consumers, especially low income and middle income consumers. One bureaucrat actually stated that the price increases are  not really that bad because the Consumer Price Index was low, that is only 2.1%. He fails to understand two basic realities; one that the basket of goods purchased by the low and middle income have certainly increased substantially over time; ask any housewife. Secondly, the food and essentials expenditure as a percentage of the total household expenditure, is higher for the poor and middle income compared to the higher income; thus the impact on them is substantially higher than the “average” as indicated in the CPI. The claim that on the average all households only have a 2.1% increase in expenditure is certainly absurd. One needs to look at the actual basket of goods of the poor and the middle-class households to ascertain the extent of the price increases on these families.

Further often bureaucrats mistaken sound bites for education.  We see a multitude of signboards, jingles and other sound bite information, supposedly to create awareness and “educate” the public about current issues.  Currently  often public relation companies who are not sufficiently informed about the issues but specialize in “spin” are given the task to “educate” the public; their failures indeed are reflected by a cynical public. Meaningful engagement has been replaced by sound bites and “feel good messages”. The public are tired of the “feel good news” rather than the truth. The truth stares at them daily in their daily market experiences. 

Never mind the silly statements by policy makers or pubic relation companies. Consumers need to take greater responsibility in facing the new market challenges.  Consumer education will empower them to do so.

Dato’ Paul Selva Raj
Secretary General, FOMCA