SHAH ALAM – Strict price controls may shield consumers in the short term, but economists warn they distort markets, fuel black markets and ultimately push prices higher.
Instead, they said the 2026 Budget should focus on strengthening supply chains, promoting competition and empowering consumers through financial literacy and targeted assistance.
Malaysia University of Science and Technology economics expert Professor Emeritus Dr Barjoyai Bardai said Malaysia’s free enterprise system allowed traders to set prices as long as buyers were willing to pay, which meant households often bore the brunt of rising costs.
“If consumers continue to purchase despite steep price increases, it is ultimately society that suffers. This is why educating consumers about financial management is crucial,” he said when contacted.
Citing a recent “Happiness Index” study, he noted that households across all states reported low satisfaction in managing their finances.
He said many cited insufficient income and spending beyond their means as the core issue.
While these concerns were valid, he said greater financial literacy and consumer awareness could empower families to make better decisions and improve their overall well-being.
Barjoyai warned that direct government control of prices risked creating market distortions.
These distortions, he said often fuelled the rise of black markets, which then drove prices up even further.
He said efforts should instead focus on stabilising the supply of essentials such as rice and flour, alongside stronger consumer protection and healthier spending habits.
He also stressed that Malaysia’s budget must be seen as a medium- and long-term strategy rather than just a short-term tool.
“Public finances should be managed responsibly, with a clear distinction between government operating expenses and public welfare spending.
“Subsidies should ideally be accounted for outside the core annual budget to provide a more transparent picture of fiscal health,” he said.
Barjoyai further proposed dedicated budgets for education and healthcare, arguing that clearer, sector-specific allocations would enable more targeted and effective planning.
Meanwhile, Universiti Malaya Social Wellbeing Research Centre research fellow Dr Zulkiply Omar said regulating prices was not the best policy.
He said the focus should be on boosting the supply side and collaborating with large retailers to launch generic brands for essential goods.
Stricter price controls were unlikely to be feasible without discouraging supply or triggering unintended distortions in the market, he added.
“Instead of price regulation, improvements in manufacturing and distribution, along with targeted cash transfers, would provide better support for vulnerable groups,” he said.
Malaysian Future Institute honorary fellow Datuk Dr Madeline Berma also said the risks of strict price controls far outweighed the benefits.
She said while they may provide short-term protection for consumers, they risked distorting the market and discouraging supply.
She pointed out that a more sustainable solution would be to promote greater competition and efficiency in the marketplace.
“This approach can help keep essential goods affordable without undermining producers,” she said.