Industry players may argue against cost regulations
KUALA LUMPUR — It’s good news for Malaysian consumers but not so for industry players.
In a bid to combat piracy, the Malaysian government recently fixed the ceiling price for locally-produced video compact discs (VCDs) of local and foreign movies at RM14 ($3.70).
The maximum price of music compact discs would be set at $5.50 for locally-produced and $7.60 for foreign artists.
The current price of original VCDs can go as high as $10.50 and CD prices range from $5.30 to $10.50.
Consumers have placed the blame on the high price of these items for the CD/VCD piracy problem in the country.
The new pricing was arrived at by the Domestic Trade and Consumer Affairs Ministry after an exhaustive study by a local accounting firm appointed by the ministry.
According to the ministry, industry players aren’t likely to suffer much with the price fixing as the study shows they should make a 10% to 20% profit margin (the study shows that currently the profit margin is between 60% and 70%).
Industry players, however, seem to disagree.
“As a matter of principle, it’s not right to set the price for these products,” says Darren Choy, the Chairman of the Recording Industry of Malaysia and the Managing Director of EMI Music (Malaysia).
“If CDs and VCDs are considered non-essential goods and are deemed overpriced, what about other luxury items? Will they regulate the price of designer jeans, for instance, because they cost too much?”
Loh Kim Wan, the president of Video and Film Industry Association of Malaysia agrees. “The legitimate VCD manufacturers will suffer because of this price fixing. Production costs are much higher than this ceiling price.”
The new pricing doesn’t come into effect until Jan. 1, and industry players believe there’s still time for discussions with the government.