June 22, 2011
KUALA LUMPUR, June 22 — Prime Minister Datuk Seri Najib Razak will launch the pioneer Kedai Rakyat 1 Malaysia (KR1M) thrift store, which promises essential goods at up to 50 per cent discounts this evening, in hopes of countering surging inflation.
The pilot store, located at the Kelana Jaya LRT station, will sell 1 Malaysia-branded goods such as rice, milk and diapers without profit-motivation, said operators Mydin, who run a wide chain of hyper and supermarkets locally.
The move comes as Putrajaya was forced to make cuts to a subsidy bill that would otherwise double to RM21 billion this year while it grapples with inflation that hit a two-year high of three per cent in March and continued climbing to 3.3 per cent last month.
If successful, the store will spawn more outlets in other rail stations that cater to lower income commuters, said Mydin managing director Datuk Ameer Ali at a pre-launch briefing.
“The cost of promotion usually adds 25 to 30 per cent to the price tag. With the 1 Malaysia brand, it is the PM himself who is providing the promotion,” he said, adding that the idea was mooted by Najib himself.
He told reporters that basic household goods such as sweetened creamer would cost RM1.95 instead of RM2.80, and diapers at RM20.50 instead of over RM40 as found in his own Mydin stores.
However, he said that KR1M would not cannibalise Mydin sales as “we are a hypermarket, of over 100,000 sq ft and sell other products besides essential goods, so our target market is different.”
Ameer said that KR1M, whose Kelana Jaya store takes up just 2,000 sq ft, would target urban poor who earned RM3,000 or less. It will stock 1,000 different items, a quarter of which would be 1 Malaysia-branded goods.
He added that KR1M would be operated on Mydin’s books as a corporate social responsibility programme but would also lower Mydin’s costs due to increased volume.
“The products are purchased from about 30 SMEs who already supply our own stores. So the extra volume will help bring cost down for all parties,” Ameer said.
The Najib administration is expected to call a general election within the year but recent hikes to fuel, electricity and sugar prices have sparkedanger, leading to protests from groups such as fishermen, whose recent strike caused a spike in seafood prices.
The government has repeatedly explained that it must cut subsidies to ensure that the budget deficit, which hit a two-decade high of seven per cent in 2009, is reined in to a projected 5.4 per cent this year.