Friday, December 2, 2011

KR1M: The cold hard facts

I truly appreciate Dato' Ameer Ali Mydin writing to Free Malaysia Today and giving his side of story after my column "Kedai Rakyat: Pulling a fast one". Once again, it truly is an honour that my articles have drawn the attention of Ministries and now Mydin, and I hope it would continue to do so as the rakyat deserves to know the facts. 

Let me first clarify that I do not write on behalf of the DAP and my views do not necessary reflect that of the DAP. What interests me more is the truth, or whether or not arguments and explanations put forth on certain issues can be substantiated. In this day and age, public scrutiny is always a good thing in order to ensure that the rakyat's money is spent fairly and wisely. 

Therefore, I was only able to base my facts on a combination of what is public knowledge and press releases on the Kedai Rakyat 1Malaysia website. I am glad that KR1M has decided to give us the facts directly so that we are able to do a more indepth analysis of the whole issue. 

Refurbishment Costs

Firstly, I would like to apologise to Mydin for my remark that renovations of the KR1M stores could be renovated for RM70,000. What this assumption did not take into consideration were cost such as the chillers and freezers, in addition to the CCTV and POS system costs. 

Taking Mydin's advice to 'do my homework', I went around to interview several contractors and they revealed several interesting points during our discussions. At the cost of RM250,000 to RM750,000 for a space of 1,500 square feet to 5,000 square feet, the cost of doing the renovation would be between RM150 to RM167 per square foot.

At first glance, these quotes are very good for these contractors and they would want to do the project. However to avoid misunderstanding, would Mydin be so kind to provide the Bill of Quantities (B.Q) so that contractors can send in their quotes? This would be to the benefit of Mydin and the rakyat to save cost, wouldn't you agree? 

Store openings

I clearly explained how I derived the number of stores to be 31 in my article. I took it that 6 outlets were opened with 25 more to open next year, therefore we would come to a total of 31 outlets. Perhaps I could humbly request that KR1M keeps their website up to date to avoid misunderstanding. 

After the clarification, we now understand that the subsidy of RM40 million is for 85 outlets to be opened across the country by 2012. This includes the seven stores already opened and 25 more to be opened this year. We shall watch this space to see whether it really happens. 

However, I have a feeling the money has already been paid out in full. Can Mydin clarify this point? With so many other scandals going on, we do not want Mydin's reputation to be tarnished if they remain silent on the matter. I am happy to give them the benefit of the doubt.

KR1M Product Quality

Unfortunately, when it comes to defending the quality of KR1M products, perhaps Mydin could have done a little more checking before being so enthusiastic to defend his products. I can accept that the generic KR1M products to be equivalent in quality to their branded counterparts, but please forgive me and the public of being sceptical in light of the new evidence. 

Ameer Ali Mydin wrote in his letter, I quote "It baffles me as to whoever gave you the idea that generic products are of lower quality. Please read up the meaning of generic products before you make such assumptions and in this case, allegations." He went on to target Tony Pua by saying "To date we have only unfounded, unsubstantiated allegations by Tony Pua. If he can so kindly provide his test reports to the ministry, I'm sure they would take appropriate action."

I think that the report from the Ministry of Health on Friday would be absolutely devastating as the "allegations" have proven to be true. Dato' Hassan Abdul Rahman agreed that the KR1M items tested by Tony Pua, Dr Dzukefly Ahmad and Nurul Izzah failed the standards set by the government, except for the creamer which is pending further investigation. 

Items specifically include the following findings as tweeted by Tony Pua:

1. MoH concedes that ice-cream product was wrongly labeled and has instructed re-labelling as "frozen confection
2. MoH accepted that "frozen confection" is still being sold as ice-cream after being given proof of receipt & price label
3. MoH admitted that own test on Krimer Pekat Manis showed 1Msia product exceeded maximum 76% sugar content
4.  MoH agreed that evaporated krimer is wrongly sold as "evaporated MILK" and will take necessary action
5. MoH admitted that when 155g sardine tins were tested, 3 out of 5 did not meet 55% net fish weight requirement
6. MoH agreed the Kari Ayam tin was inadequately labeled and failed to comply with Clause 147 or 151 of Food Regulations '85
7. MoH noted the conflict in Growing Up Milk ingredient label - "susu pepejal rendah lemak" or "instant whole milk powder"
8. MoH agrees that both "follow up milk" and "growing up milk" serves kids aged 1-3 but says covered under different law
9. MoH agrees that GrowingUpMilk serves 3888IU of vitamin A per day exceeding limit for 1800IU children under 3
10. MoH informed that they've "advised" supplier of 1Msia Growing Up Milk to cut excessive Vitamin A & top up other nutrients


With regards to the remarks made about foreign hypermarkets and also other operators running KR1M stores, that is a government matter, so I will not rebut any of the points made as Mydin knows their industry best.

However, I would like to say that Malaysians should embrace foreign competition as it would ensure the Rakyat receives the best prices and services, as well as creates jobs and stimulates the economy. As for the KR1M concept, it may be a CSR initiative but as 1Malaysia is a brand in itself, there would be no need to spend on advertising for it.

It is true that many journalists and politicians make empty allegations against the federal government, Members of Parliament and even government linked companies. However, it is becoming apparent that there is a tangible silence when allegations are revealed to be true, or there is a substantial amount of finger pointing to divert attention from the core issues.

I have absolutely nothing against Mydin or their companies. They have been upstanding, well respected businesses in the industry and serve their customers with integrity and professionalism. However, we want to ensure that this is maintained and criticism is supposed to help improve the services provided. Is this not why so many companies have feedback forms?

My compulsion to write again on this topic is because I do not think that it is fair to accuse me of making allegations when there is evidence to confirm them. When I am wrong tell me that I’m wrong. However do not tell me I am wrong, when it is proven to be true.

Ameer Ali Mydin closed off his letter by remarking "It appears that making false, unsubstantiated allegations is the easy part for Douglas Tan. The difficult part is for him to justify the allegations, unfortunately the damage to the IKS Suppliers and KR1M is already done." 

Well, it appears that I have. Checkmate.

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1 comment:

  1. Ameer Ali Mydin wrote in his letter, I quote "It baffles me as to whoever gave you the idea that generic products are of lower quality. Please read up the meaning of generic products before you make such assumptions and in this case, allegations."

    So here it is, the definition as per WIkipedia:
    "Generic term, a common name used for a range or class of similar things not protected by trademark"

    And then I can only comment to En. Ameer... While you are correct to allude to the definition of "generic" as to define items similar or same as a branded item, you are conveniently forgetting the other side of the coin.

    "Branding" for items is done to promote the company and it's products and to make the product recognisable to the consumer at a glance. Whether it be in terms of quality, function, etc. The customer knows to trust the brand.

    However what the brand does for society as a whole is that it puts a heavy burden on the owner of the brand to stand by their product and to ensure it does no damage to the consumer who buys it. Failure in upholding the brand has heavy consequences for the brand owner.

    This is where a "generic" product can fail, and does fail it many many instances. There is no one standing behind the product who puts on the line his reputation and name, and survival. The only entities that stand at risk are the retail store (K1M in this case) and the consumer. That is the main reason "generic" products are always suspect and even more so when they are priced below market for no explainable reason, especially if being generic is the only reason that the price is lower.

    It is therefore then the higher responsibility of the regulatory bodies of government, or failing that, civil society, to be the watchdog to protect the consumer and more so the vulnerable members of society who are the main clientele for these types of stores/products.

    In this particular case, we have the government on one hand initiating the K1M stores, and on the other hand being supposedly the regulatory body to control and monitor. It's no wonder that this failed in this respect.

    It's all a result of people thinking they are smarter than they actually are, and not understanding the workings of commerce, society, and government, and more importantly understanding and abiding by the need for separation of these 3 entities so that there are checks and balance.

    Kudos for Tony and Nurul for taking the initiative on this. But frankly it shouldn't be their job. And it doesn't need to be political. There should be an apolitical Consumer Protection Agency, with teeth, and with the freedom to act and to represent the consumers' interests. Nothing more. Nothing less.