AG:
As we had said earlier on that the price determination following receiving submissions will be made by the Commerce Commission. The Chair of Commerce Commission Dr Reddy is here with us with the various determinations that have been made in respect of the various items and I will let him talk to you about that before we make some more comments.
Dr Reddy
As you know, following our meeting on Thursday last week with the retailers, we had said that the prices that were determined by the Commission must be effective from Saturday last week but we said we are happy to undertake a revision this week given if they submit new information. They did start to submit immediately after Thursday till Tuesday, Tuesday was the deadline. Following that submission, the Commission undertook a detailed analysis of the new data that they provided and adjusted some of the prices.
As you know the previous determination resulted in reduction of the prices by approx 13 percent on an average. After revision the prices have now gone down, instead of 13 % by 9%. So again a major reduction of prices from what the prices were prior to last Saturday.
Now with the determination, while we were working with the retailers, we have made some other adjustments. This includes;
1. We have removed a number of items we thought will have equivalent substitutes for consumers therefore the substitutes are not placed under price control but the rest are removed.
2. The high end items are removed because these items are targeting a different category of consumers and therefore this category of consumers, if they wish to consumer those high end products, then they should pay the price determined by the supermarkets.
3. What we have done within the say particular category of rice, we have removed certain quantities packaging out of the list where traders have a leeway of putting the margin that they wish to. For eg, rice that comes under price control ranges for packaged 1kg, 2kg and 10kg. If someone has a 4kg or 8kg package, then it is not under price control. So if consumers are willing to buy price controlled rice package, then they should either go for 1kg, 2kg or 10kg. There are some who may want to choose otherwise then they will have to pay a price of the choice of the supermarket. So in this way we are able to create room for supermarkets to have a higher margin for the non-priced one whereas in this one we go by the template. What we have done is in the determination we have built in a mechanism, if they don’t stock the price-controlled rice, then automatically the proportional pricing clause of the Commerce Decree 2010 will apply which means they will not able to have any additional margin other than what is set by the Commission. So they must have in stock every point in time 1, 2, and 10kg rice packet then they can have any other one where it won’t be under price control.
So in this way we are able to address some of the issues and concerns that they had initially saying that these are the high turn over items and all of them if placed under price control gives a very low margin. So what we were able to do is relook at the list and remove some of items that are in the higher-end or they have substitutes so consumers with full information will then decide which one they want to purchase if the substitutes are available either the price-controlled ones or the non price-controlled ones.
The other issues that were raised after the last determination was the margin we were allowing for those corner shops or those who are based in Vanua Levu or in the outer islands. We have adjusted that again. For eg a corner shop operating within Viti Levu, we have given them an extra margin of 3%. For an urban Vanua Levu retailer, we have given them an extra margin of 6% relative to counter-part in Suva. For rural operator in Vanua Levu, they have an extra margin of 9% relative to the Suva one. Whereas for the outer island its10% more than the Suva one. So in this way we are able to allow them for the differences in freight cost and differences in scale.
So these adjustments were based on the responses we got from the retailers operating in different locations. This new price determination is effective from tomorrow. And we expect these new prices for retailers, traders, importers and wholesalers to follow the determination from tomorrow when businesses open.
Our officers will be on the ground to ensure the price determination is fully complied with. As you know there are severe penalties as stated in the Commerce Commission Decree 2010 and the Commission will ensure that the decree is followed to the latter of the law.
AG:
It became quite evident that many of the submissions that were made to the Commerce Commission even after the additional time was given to them, lacked a lot of documentation for them to be able to arrive at some solid findings. I would like to make a comment in that respect.
Government has categorically stated we want to support businesses, we support investment. Only yesterday the PM as minister for Finance also has given a concession to a particular manufacturer in terms of duty concessions and he has also done that previously. Now that is government’s commitment into the business community in terms of manufacturing in particular.
However there does exist a culture of non-disclosure and that is quite evident. Through the Commerce Commission receiving lack of submission and also some of the obfuscations that have taken place in terms of contrary documents being given to the Commerce Commission, it is quite indicative of the fact that there is a general lack of disregard for disclosing all material.
Now what we are saying is that make the full disclosure, as you should make full disclosure to FIRCA, as you should make full disclosure when you bring in your good at the border. Don’t double invoice, don’t have 2 set of documents, one officially and one unofficially that you keep. That is a problem and this exercise actually demonstrated that. That it actually is a problem in Fiji. We want competition we want to have a liberalized market but competition and liberalization also means you have full disclosure. So everybody is aware. You can make your profit; you can make heaps of profit, but have full disclosure ss far as all the authorities are concerned.
The determination that has been made by Dr Reddy and his team, you can see has got a very liberal approach. His given that flexibility to shop keepers in terms of having various packaged items that are not price controlled even within the category as you see for e.g. there are various brand that are no longer price controlled as he has said earlier on. With cooking oil for e.g. Olive Oil even before you start retail, landed cost is very expensive. So the people on the lower end of the socio economic scale will not buy it in any case. So the logic is why price control it. Similarly goods that are canned in Fiji for e.g. tinned fish is not price controlled. So they can compete as you let the market determine the price and that’s the level of flexibility that’s been built into this price determination that’s been handed down by the Commerce Commission.
So we support that, I know some of the retailers how probably always had a culture of getting away through non-disclosure. Our appeal to them is to please participate and collaborate. If you do not make full disclosure to FIRCA, to Commerce Commission, the law is there to be applied to you and I think in this way what the Commerce Commission has done today is very liberal, is very modern, it’s got a targeted approach to those branded items or those items that the lower end of the socio economic scale would want. And we need to assist them. We need access to basic food items at affordable prices because if people are able to eat and feed themselves, then they become productive members of society, it’s also just and fair.
So with that approach and the fact that whilst we are putting those controls in place, at the same time there is a flexibility of those businesses that deal in consumer items, they have got the flexibility of having numerous items that are not price-controlled.