The Bigger Issue With Face Masks — Dr John Teo

By CodeBlue | 04 April 2020

We can put a ceiling price for all we want, but if our ceiling price is below the global price with many bidders, naturally we will get none or very little.

  •  
  • 4
  •  
  •  
  •  
  •  
  •  

There is now intense debate about whether everyone should be wearing face masks even when they are well to prevent Covid-19 transmission.

There are now significant calls by many for authorities to recommend universal use of face masks.

Many in the public are already doing so, but the obvious problem is of course the availability of face masks as the whole world is scrambling to buy them, thus the suggestion of using cloth face masks by the public who are symptom-free.

Shortage of Face Masks

Despite the above, many frontliners and health care workers still experience a shortage of face masks in their daily work in fighting the pandemic.

This is particularly worrying as they are our most critical line of defence.
For each health care worker who is infected and unable to continue to provide care or worse still needing critical care themselves, there are massive ramifications.

Each health care worker who is stood down means less care to the public and diminishes our health care system ability to cope with the Covid onslaught.

The Reality

There are long lines of people lining up outside pharmacies whenever a fresh supply of face masks is available. There are even people fighting over face masks.
Many pharmacies put up signs that says ” No face masks”. Online portals who offered face masks had their stocks snapped up in hours.

Many scam sellers surfaced and black market sales of face masks seems abundance making the situation worse. Doctors and clinics themselves are often severely depleted and some had to close simply because they can’t continue to see patients unprotected.

The Face Mask Business

The business of face masks and personal protection equipment is not just any ordinary business, but can in fact threaten and affect the lives of many.

It can mean life or deaths for some of our most vulnerable and weak in the community.

It can mean the pandemic continues to spread unabated. It can mean our economy and health care system collapsing when there are no face masks to protect all.

The Government Action

The Malaysian government fixed the price of 3-ply face masks at 80 sen per piece and resulted in severe shortage. Then subsequently raised the ceiling price to RM2 per piece and, a week later, reduced the ceiling price to RM1.50 per piece.

This flip-flop policy doesn’t seem to alleviate the situation in the short and long term and may threaten our health care system with severe consequences.

The Economics Of Face Mask Supply

China is the factory of the world for facemasks and local producers also rely on China for their raw materials.

When many countries are bidding for face masks or vying for the raw materials, the price will naturally increase to even multiple folds and in many instances, supply will go to the highest bidder.

We can put a ceiling price for all we want, but if our ceiling price is below the global price with many bidders, naturally we will get none or very little.

It’s paradoxical to note that fixing the price for face mask implies disallowing free market forces, but yet, the supply is dictated by free market prices and offered to the highest bidder globally.

Malaysians may face a long-term shortage of these lifesaving masks and in fact, supply may continue to go to many other countries who are able to acquire it at higher prices.

Logically, prices will come down when supply outstrips demand, which may not happen in the near foreseeable future with the Covid pandemic taking a foothold in many countries in the world.

No doubt, the government intention on fixing the ceiling price for face masks is noble, realising it as an integral life-saving item and attempting to ensure affordable access to all.

Sadly it may backfire with many frontliners and health care workers facing constant shortages, not to mention the public.

The Solution

If the government intends to continue fixing the price of face masks, then either the government gives subsidies when the global price outstrips local ceiling price, OR the government takes over local production of face masks and makes it available at a fixed price.

Alternatively, instead of a fixed ceiling price, the government can have a fixed percentage markup from import or wholesale price, and thus allow the free market to function and ensure continuous supply.

Fixing a ceiling price for face masks in the scenario of a global free market is a classic example of how well-intended policy may backfire and result in consequences that are the opposite of what is intended.

We hope that instead of succumbing to populist policies and allowing the shortage to fester, we should implement more practical solutions in the face of the global reality.

  • This is the personal opinion of the writer or publication and does not necessarily represent the views of CodeBlue.
  •  
  • 4
  •  
  •  
  •  
  •  
  •  

You may also like