We welcome the Minister of Communications and Multimedia, Datuk Seri Ahmad Shabery Cheek statement on Monday evening that mobile prepaid cards should revert to the old, pre-goods and services tax (GST) prices as soon as possible.
“The rakyat want to purchase RM10 worth of prepaid credit, and they want to get airtime worth RM10. That’s what the people want… That’s why I have made the decision that if this is what the rakyat want, then that is my decision,” he said during an interview with national broadcasting station RTM1.
This is a clear reversal from his earlier position where he had proposed that either a prepaid card is sold at RM10.60 for an airtime value of RM10, or a GST-inclusive rate of RM10 for an airtime value of RM9.43.
However, we must ensure that the reversal is not done at the expense of the Government where the tax-payers end up having to subsidize these telecommunication companies. In the past, these telcos were able to make billions of ringgit of profit offering RM10 worth of prepaid credit for RM10 while absorbing the then 6% service tax.
Despite absorbing the 6% service tax, Maxis Communications, Digi Telecommunications and Celcom Axiata made pre-tax profits of RM2.44 billion, RM2.65 billion and RM3.1 billion respectively in 2014. In total, they collected RM12.8 billion in prepaid mobile services revenue for the year.
Hence the replacement of the old 6% service tax with the new 6% GST should not in anyway affect the cost or profitability of these companies. Therefore, there is no reason at all for the Government to offer the telcos any exemptions from fulfilling their tax obligations while maintaining the existing prices.
The Minister must make the Government’s position clear that any attempt to increase the prices for prepaid mobile services at the moment breaches the anti-profiteering act. The Prime Minister, Datuk Seri Najib Razak himself has condemned such price hikes and demanded that the authorities “come down hard on the profiteers and unscrupulous traders who manipulated the GST for their own extra financial gains”.
Not only will the telcos run afoul of the Anti-Profiteering Act, they will also breach the competition clauses of the Communication and Multimedia Act 1998. This is because all the telecommunication companies are raising prices by a uniform 6% at the very same time. It clearly reflects an anti-competitive and collusive practice.
Under Part IV (Economic Regulations), Chapter 2 (General Competition Practices) Clause 133, telecommunications operators are prohibited from “entering into collusive agreements”. It says that a licensee shall not enter into any understanding, agreement or arrangement, whether legally enforceable or not, which provides for rate fixing and market sharing, among other terms.
The telecommunication companies have already enjoy a full month of honeymoon when they were able to increase their profit margins by 6% in April, using the GST implementation as an excuse. Based on last year’s revenues, they have already collected an additional profit margin of RM64 million which is sufficient to compensate for any minor readjustment to the computer system which they need to perform.
Therefore, we call upon the Minister to ensure that the telcos comply with both the Acts immediately, failing which the Government must take prompt action to penalise these companies for their attempts to victimise Malaysian consumers. Datuk Seri Shabery Cheek must stop the duplicity of taking action against petty traders for alleged profiteering, while letting these big sharks get away scot free.