Protecting the consumer
22/07/2005 The Sun By Sharon Kam

CONSUMER rights are usually seen in terms of an endless battle against business and bureaucracy for better protection for the small guy. However, Malaysians can take heart that measures that are in place here put us in the top rank of nations in this area.

The good news is that over the past few decades, the government has slowly but surely adopted key instruments that strengthen the consumers' position.

One of these is the setting up of the Domestic Trade and Consumer Affairs Ministry. This step, taken in 1990, makes our government one of a select number that has such a portfolio.

It didn't happen all at once, of course. Even before the Independence, there have been laws that protect consumer rights. But such piecemeal legislations as the Price Control Act 1946 and the Second-hand Dealers Act 1946 were limited in scope. What was needed was one broad law that would enable the enforcing authority to regulate all kinds of business activities in the consumer's best interests.

This cause inspired consumer groups to push for a comprehensive Consumer Protection Act (CPA).

After more than two decades of lobbying, the CPA finally became a reality in 1999 and with it, the setting up of the Consumer Claims Tribunal.

It was a double bonanza for consumers: a catch-all law that could be invoked for various consumer situations except areas like housing and health which are governed by separate laws, and a forum for seeking redress even for small wrongs.

More progress has followed.

In 2002, the National Consumer Policy was launched, and following that a National Consumer Masterplan.

"In terms of consumer protection, we have it very good compared with other countries in the region.The government has been quite responsive to consumer protection.

"There are only around 30 countries in the world that have constitutional provision for consumer protection and Malaysia is one," says Datuk Dr Sothi Rachagan (pix, right), adviser to Consumers International (CI) Asia Pacific and vice-president (academic) of Nilai International College.

We also have strong consumer organisations and consumer education has become part of our formal education. Another significant development in consumer protection took place earlier this year when the Bank Negara announced guidelines for standardised bank charges for basic financial services to ensure access to basic banking services. The Financial Services Mediation Bureau which replaced the Banking Mediation Bureau was also launched at the same time, as was the Insurance Mediation Bureau.

The Consumer Claims Tribunal and the Housing Tribunal which were launched in 2002 and the Financial Services Bureau have proven to be quite effective in providing redress to consumers.

Malaysia is one of the few countries in the world that has taken such measures to protect consumers, says Sothi.

"I have seen what it is like in other countries so Malaysia seems to be faring much better than some countries in the region.The country generally takes a strong consumer protection stand," he says.

Whether one likes it or not, consumer protection has to be taken seriously because it is becoming increasingly important to protect people in a market economy, he adds.

Back in Malaysia, although we have made significant progress, there are still areas in which we are lagging not least with regard to the running of our daily lives.

Sothi notes that the healthcare sector is one major area of concern considering the rapid increases in costs. "About 80% of healthcare costs are met at the last 20% of our lives which is when we do not have an income. Insurance does not provide for inflation and there are all sorts of exclusions. Fortunately, Malaysia still has one of the most humane healthcare policies in the world.

"The fear is that the government will change the system and we are uncertain about what form it will take. The lack of public involvement in consultation is a problem," he says.

Public transport is another area which needs urgent improvement. Congestion and rising fuel prices and an inadequate public transport system continue to plague consumers especially in Klang Valley. "We have heard of all kinds of plans for the transport system in the city but there are still no solutions. We have the light rail system but it does not cover major residential suburbs like Puchong and Subang. We need a more comprehensive system because the cost and the hours lost from travelling to and from work are unhealthy and unproductive," he points out.

Sothi also warns consumers to be wary of the fusion of interests between politicians and businesses. This is nothing new as there is the general perception that the corporate or business sector influences government.

"Industries and corporations often look after their own interests by looking after the interests of political parties. This is made worse when elected representatives have direct interests in businesses.This is a major area of concern," he says.

Sothi cites the example of contracts made with highway concessionaires which allow toll increases over time, failing which the government has to pay compensation.

"The taxpayer or road user is therefore caught in a Catch 22 situation. It is ridiculous that such contracts are made," he adds.

While these issues need attention, another longstanding issue is the lack of enforcement of laws.

Says consumer activist Josie Fernandez (pix, left): "Getting a good, strong piece of legislation like the CPA took so many years. Legal reforms for consumer protection have taken a long time, but having obtained these laws, we realised that the implementation and enforcement and the ability of the consumers to make use of these laws need to be addressed.

"The law can only be effective if the people whom the law is intended for make use of it. Besides greater enforcement, laws constantly need review while new laws have to be made to cover new issues facing consumers.

"New products and services are constantly entering the market where they were unheard of before. But, are consumers warned about health and safety precautions they need to take when using the products and services? We see all sorts of suspect goods in the marketplace. The ordinary consumers are not being informed properly about the products."

One way to overcome that, she suggests, is to have a consumer information centre in every town so that the buyer can get information. Another is to have independent laboratories for testing safety and standards of products like those in Britain.

"If consumers are well-informed and assert their rights and responsibilities, the work of policing will not be a major role of government," says Fernandez who received the Tokoh Pengguna award in 1994.

Business in Malaysia seems to have the upper hand. "Overseas, you can return goods if you are unhappy with them but over here we have shops that tell you that goods sold are not returnable.

"Businesses say self-regulation is how business need to operate but self-regulation can only be successful if consumers are empowered," she says.

Empowering consumers is more than raising awareness, it is to reach a level of consumer literacy.

"We are consumer literate when we read the fine print at the bottom, when we know what questions to ask when buying an item like a car. If consumer literacy is high, then we have the ability to make wise decisions," she adds.

This means that we have to put in more resources for both government and consumer organisations to play central roles in empowering consumers.

The consumer movement itself needs empowering. According to Fernandez who was the founder president of the Education and Research Association for Consumers (ERA Konsumer), state-level consumer associations have remained small and weak in financial management, research, policy analysis and other abilities. Consumer associations tend to be reactive because of lack of competency. They operate on funds raised on their own. The RM10,000 grant from the government is not enough.

"Malaysians will raise funds for charity but not for advocacy. We will donate to people who have a hole-in-the-heart or to tsunami victims but how many will donate to consumer campaigns, let's say on water? This means government support is essential but consumer associations also need to be accountable," she says.

As for the media, that have the role of providing information to consumers, she feels it is more pro-business than pro-consumer.
Consumer protection in the country also needs to take cognizance of the consumer needs of different demographic groups in our society such as children and senior citizens, not forgetting the poor and minority groups.

"How often to we check the safety and quality of products meant for children? Toys which are being imported - what are the standards being observed? Our borders open and there has been a deluge of goods from China. How safe are they?" she asks stressing the importance of enforcement of regulations to ensure standards and safety.

"If we notice, we often find that things which are of higher standard produced in Malaysia exported because of the standards set in the importing country while locals get the lesser quality goods," she points out.

According to her, our focus when it comes to consumer protection is still narrow and limited.

People still fail to see that everyone are consumers and everyone is involved in protecting ourselves as consumers. The whole government, not just one ministry, has to be one in its resolve to uphold consumer protection especially when there are so many ministries in charge of different areas affecting consumers.

Much more needs to be done and we are constantly playing catch-up.

As Sothi says with the environment changing all the time and with new products and services coming out all the time, consumer protection is a continuous exercise because of this continuous development of goods and services. One can never be satisfied with the levels of consumer protection we have today.


The challenges ahead

The future holds myriad challenges for consumers. Consumer protection has to be constantly upgraded and improved to keep up with developments in the country and internationally.

Federation of Malaysian Consumers Associations (Fomca) deputy secretary-general and chief executive officer Indrani Thuraisingham (pix, left) says: "In a globalised world, we do not even know who is behind the product anymore, it can come from any part of the world which means all the more we need safety nets for consumers in a globalised world."

Consumer movements have to evolve with the times, and look beyond the "tin kemek" and the conventional "value for money" issues.

"We are now talking about value for people and value for the environment as well."

Fomca and the Domestic Trade and Consumer Affairs Ministry will be organising a National Consumer Convention with the theme "Smart Consumer: Value for Money, Value for People and Value for Environment" on Aug 2 and 3 in conjunction with National Consumers Day.

In the past, defective products were the main issue but now there are deeper, more complicated issues. One such new area is e-commerce where issues such as credit card information, safety and privacy are raised.

"Unless the industry or government ensures the data is secured and that consumers' interests are protected, consumers will not be confident to use these systems," says Indrani. Consumers too have to be mature enough to use these systems. This is where consumer education comes in.

Other new issues facing consumers include the food safety aspect of genetically modified foods, consumer credit, sustainable consumption and the issue of globalisation of the marketplace, intellectual property rights and how they impact consumer knowledge and others.

Consumer credit is a worrying issue considering the easy access to credit and the rising number of bankruptcies.

Fomca is also concerned with deregulation and privatisation because in Malaysia, consumers are burdened with privatisation. Consumers end up paying more but do not necessarily enjoy more benefits when a service is privatised.

Essential services like water, electricity and healthcare cannot be privatised, she stresses, as they are fundamental needs of a healthy nation.

For a country like Malaysia, which is moving towards developed status, the government has to ensure that its people stay healthy, wealthy and not leave behind those who are poor or marginalised, she says.

Citing healthcare as an example, she says the government is not spending as much as it should on healthcare.

The World Health Organisation (WHO) recommends that 5% of a country's GDP be spent on healthcare but Malaysia is only spending 2-3% of its GDP in this area.

Food safety is another issue with technological advances bringing new concerns.

"Do we know what is in our food, how they are produced and what methods are used since we do not have biosafety laws on genetically modified food and there is no requirement for labelling? Consumers have the right to know for any number of reasons," says Indrani.

For instance, there are experiments being done on tomatoes which are being modified with an Alaskan fish gene to produce tomatoes which can withstand cold. "If one day that tomato goes on the market, vegetarians may not eat it if they know it contains fish genes. Most of the time however, consumers buy and eat food without knowing what is in them."

The government's biotechnology ambitions seem to have left out such issues which will impact consumers.

With trade liberalisation, prices continue to go up.

"With trade liberalisation, consumers expected cheaper prices and more options. Although we have more choices, prices are still going up. We also have to think of our local smaller producers and farmers. With liberalisation and globalisation, the big guys will be the one with the resources to rule the market," says Indrani.

Laws need to be constantly amended to cover new areas and issues affecting consumers.

The consumer movement has been calling for a review of the Consumer Protection Act (CPA) for some time to cover crucial areas such as health and housing.

Indrani, who is also ERA Konsumer secretary-general, says unlike in Britain, India and Australia, the CPA in Malaysia does not cover these areas.

"In Malaysia, consumer issues cut across government jurisdictions. For instance, health issues come under the Health Ministry and housing comes under the Housing and Local Government Ministry. The CPA is more of a supplementary act in some of these areas which are exempted from the CPA." Ironically complaints related to these two areas are among the most commonly received by Fomca.

Indrani says the law should also allow for class action where a group of aggrieved consumers who faces the same problem is allowed to file action as a group. At present, individuals in the group have to file their cases individually although they face the same problem with the same trader.

"Sales of products and services are usually aimed at the masses so it is a limitation that redress can only be recovered on an individual basis," she says.

Indrani feels the government still tends to be pro-industry.

"Producers continue to dictate prices by giving all sorts of excuses. They tell the government the need for increased prices for this and that, including water. Negotiations with government almost always end up with the consumers paying more."

For consumer activist Josie Fernandez, who is also the director of Initiatives for Sustainability, a consultancy on sustainable development, the way into the future is to head for sustainable and ethical consumption and development, and the National Consumer Policy launched in 2002 is based on these premises.

"The future of this earth lies in ethical consumption and sustainable development. Now the focus is on corruption and integrity but, sometimes, we forget that it is because of our consumption behaviour, because of a consumerist society where people want more and more to satisfy themselves, which tempts us into corrupt behaviour," she says.

"If the government wants to address ethics and corruption, it should have an action plan on sustainable consumption. We lack action plans. We need to translate policies into action. We have a National Consumer Masterplan and a national policy but how do we implement them?" asks Fernandez, who is a consultant to Fomca. She has also helped the government draw up the National Consumer Masterplan.

The Masterplan 2003 - 2015 is a comprehensive Masterplan which looks at weaknesses and needs and has proposed more than 100 recommendations covering extensive areas. But, it has yet to be implemented.

The next step is therefore to translate policy into action considering both existing and new challenges which consumers have to face.

Justice swiftly and cheaply

The setting up of the Consumer Claims Tribunal has been singled out as one of the most commendable achievements in consumer protection in the country. Since it was set up in November 1999 under, the number of cases heard and inquiries received by the tribunal has increased dramatically. The 291 cases it heard in its first year has grown to 5,076 cases last year.

It has also shown itself to be sensitive to changing consumer needs and made necessary changes to keep abreast of the times. In a relatively short time of its operation, it has increased the amount of claims from the initial RM10,000 to RM25,000 in 2003 and may increase the amount to RM50,000 by the end of this year depending on the outcome of a viability study, says its chairman Rungit Singh (pix, left).

"We've to consider the growing affluence of society. Nowadays, people buy more expensive goods and services such as luxury cars, club membership, down payment for houses, all these costs more than RM25,000 sometimes."

The growth in claims reflects the growth of the tribunal and the growing awareness on consumer rights in general and of the tribunal in particular, says Rungit. From January to June 31 this year, it has already recorded 2,742 cases while till June 15, there were 14,440 inquiries through its hotline and counters.

The tribunal has 15 branches, one in every state capital. But if there are many cases coming from one area, the tribunal may hold ad hoc sittings at these places.

The tribunal not only hears cases but also provides legal advisory services since it does not allow lawyers to represent the parties involved.

Its services include advising parties, assisting in filing of claims, defence and counter claims, preparation for hearing, assistance in how to put forward cases, and after awards or orders are issued, guidance on how to get compliance.

"We offer the services to both parties, we are fair to both sides," says Rungit, adding that it is a misconception to think that the tribunal sides consumers as decisions are made based on the facts of the case and not on the parties.

On how the tribunal would like to improve its services, Rungit said: "Of course we would like to take justice to your doorstep since it would be quite a distance for a person to travel say, from his kampung in Langkawi to Alor Star where the branch office of the tribunal is. So ideally we would want to make the tribunal more easily accessible but it will be costly."

The tribunal tries to live up to its motto of Mudah, Murah dan Cepat or Simple, Cheap and Fast. It only takes RM5 to file a claim which will be heard within 60 days. Awards made by the tribunal must be complied with in 14 days. Otherwise the enforcement division of the Domestic Trade and Consumer Affairs Ministry can take legal action for non-compliance.

The tribunal hears around 15 cases per sitting. There are nine presidents who goes around the country for sittings.

The tribunal sometimes has to turn away consumers who want to make claims related to health services such as improper billing by private hospitals, maternity services, and others as these issues are not under the jurisdiction of the tribunal.

One reason why health services are not included is because medical practitioners like lawyers have their own professional bodies.

But Rungit suggests a study be carried out to see whether the tribunal needs to extend its jurisdiction to cover some aspects of health services such as healthcare billings.

To date, the majority of cases received by the tribunal involve information technology communications products and electrical items such as computers and phones, and the usual household electrical stuff. "Most of the time, the complaints are about defective products, poor quality, products not functioning as they should, the short warranty period which the tribunal can extend and others," he explains.

The second most popular complaint is about cars, ranging from car sales to repairs.

Rungit believes the tribunal has made its presence felt even among the business community or providers of goods and services as traders now know they cannot pass off shoddy work or sub-standard products and services.

For information on the tribunal, call toll free at 1800-88-9811 or log on to www.kpdnhep.gov.my