Copper coins on their way out

10/09/2008 15:13

The Consumer Council of Fiji has been engaged in meetings with the Reserve Bank of Fiji over the past weeks to discuss the effect on consumers of the federal banks decision to cease the issue of 1-cent and 2-cent coins from 13th October 2008. This means that new lowest denomination in Fiji’s Currency Structure will be the 5-cents. In January 2009, RBF will additionally cease to issue the existing 5-cents, 10-cents, 20-cents, 50-cents and $1 coins as these will be replaced by new coins, which will be smaller and lighter. Until 31 March 2009, the old coins will continue to be accepted as legal tender and can be used for payment of goods and services. However, come 1 April 2009, old coins will not be accepted for payment of goods and services - 1c and 2c coins will cease while 5c,10c,20c,50c and $1 coins will be replaced with new look coins.

While the Council sees the merit in ceasing the production of the copper coins if such changes lead to cost savings, the implications on consumers, in particular those at the lower end of the scale will need to be considered. The production of the copper coins cost the taxpayers of Fiji a lot of money, as they are expensive to make at more than 4-cents per coin. These coins have also lost their buying power and value, as consumers now do not bother to use them or collect them in the form of return change when making payment of goods and services. The coins are therefore lying idle in draws and on shelves. 

The Council, however, has some concerns regarding the cessation of the 1c and 2c coins, towards which it feels the regulatory authority has failed to put focus and thought. The cessation will result in the rounding-off on a consumer’s total purchase value to the nearest 5-cents. RBF has come up with a rounding principle whereby the rounding –off will be either up or down. It is important to note that the rounding-off will not be applicable on individual items but on the total value of the transaction. In this regard, the Council has two specific concerns, which it feels consumers can be cheated by unscrupulous traders who may try to beat the proper application of the rounding-off principle by unsuspecting consumers.

First concern is on the rounding-off principle application on the large number of unregulated items in the market place as opposed to the same application on the regulated items by the Prices and Incomes Board. There are only 23 items in Fiji’s marketplace that currently have their prices regulated by the Prices and Incomes Board. As such, should traders wrongly apply the rounding-off principle, the PIB can take them to task. However, if the principle is wrongly applied on the large number of unregulated goods and services, there is no mechanism currently in place to label the act as an offence and provide consumers with redress. For example, according to the rounding-off principle for 1c and 2c prices is to be rounded down. Hence, a product costing $2.41 or $2.42 is to be rounded down to $2.40. Whereas, for 3c and 4c on exemplary prices of $2.43 or 2.44, the price is to be rounded upwards to be $2.45. Consumers who are unwary of the rounding-off principle can become victims of rounding-off figures upwards instead of downward on their total value of the transactions, depending on the last mentioned cent on the total figure

Second concern is that some traders may act unscrupulously to round-off the figures on individual items on the shelves and round-off again at the point of sale (at the cashier). Consumers can therefore become victims of double rounding-off on products and in particular on the products that are not regulated by the PIB.

Given the above concerns by the Council that relate specifically to the unregulated items in the marketplace and the possible abuse of the rounding-off principle application on these products, the Council calls on the government to seriously consider revising the list of items regulated by PIB and make additions to the list.  If the unregulated products have high price tags, the consumer affordability of these products and their choice would be affected. The most affected would be consumers in the rural areas and outer islands where the limited number of shops will prevent competition on the prices of unregulated products, forcing consumers to pay the high price.

The RBF campaign will commence next Monday on raising awareness, educating and informing consumers of the changes that will come about because of the cessation of the 1c and 2c coins. To Council will also be highlighting the same to ensure consumers understand how they would be affected. Consumers are encouraged to learn and seek as much information as possible to ensure they are fully informed and ready for the changes. They can contact the RBF Currency division staff or the Consumer Council office.