Coin's last call
Jan 2008
They cost more to produce than they are actually worth, so come 1 April 2008, the Malaysian one sen coin will no longer be in use. All payments will therefore be either rounded up or down to the nearest five sen. However, the coin will not be demonetised and will continue to be legal tender up to a limit of RM2.
Malaysia's central bank, Bank Negara, will reduce production of the coin with the view to eventually withdrawing it completely. It currently produces 30 million pieces of the copper-based one sen coins per month. The price of copper has steadily increased over the years, from US$1,500 (RM5,028) per ton in 2002 to US$7,500 (RM10,057) in 2007.
Ironically, the cost of production is about 4.2 sen per piece, more than four times the actual value of the coin. With the cut in production, the Government expects to save about RM14m in annual minting costs.
Another major reason for taking the coin out of circulation is the cost connected with its issuance and administration. Charges paid to security companies to handle and transport the coin can be as high as RM3 per bag, and RM60 per trip. There have also been instances where a shortage of the coin has occurred, leading to an increase in customer dissatisfaction.
Consumers' main concern is that the removal of the one sen coin from circulation, and the resulting move to 'round up' or 'round down', will cause an increase in prices. However, the Ministry of Domestic Trade and Consumer Affairs says that the move has more pros than cons for both consumers and retailers.
The Minister, Shafie Apdal, added that the coins usually ended up unused as consumers were not particularly concerned about such small change; this contributed to economic wastage. On concerns that the move to round off prices could cause inflation, he said that according to analysis done by Bank Negara, countries that had made similar moves only experienced an effect of about -0.0004% on their inflation rate.
They cost more to produce than they are actually worth, so come 1 April 2008, the Malaysian one sen coin will no longer be in use. All payments will therefore be either rounded up or down to the nearest five sen. However, the coin will not be demonetised and will continue to be legal tender up to a limit of RM2.
Malaysia's central bank, Bank Negara, will reduce production of the coin with the view to eventually withdrawing it completely. It currently produces 30 million pieces of the copper-based one sen coins per month. The price of copper has steadily increased over the years, from US$1,500 (RM5,028) per ton in 2002 to US$7,500 (RM10,057) in 2007.
Ironically, the cost of production is about 4.2 sen per piece, more than four times the actual value of the coin. With the cut in production, the Government expects to save about RM14m in annual minting costs.
Another major reason for taking the coin out of circulation is the cost connected with its issuance and administration. Charges paid to security companies to handle and transport the coin can be as high as RM3 per bag, and RM60 per trip. There have also been instances where a shortage of the coin has occurred, leading to an increase in customer dissatisfaction.
Consumers' main concern is that the removal of the one sen coin from circulation, and the resulting move to 'round up' or 'round down', will cause an increase in prices. However, the Ministry of Domestic Trade and Consumer Affairs says that the move has more pros than cons for both consumers and retailers.
The Minister, Shafie Apdal, added that the coins usually ended up unused as consumers were not particularly concerned about such small change; this contributed to economic wastage. On concerns that the move to round off prices could cause inflation, he said that according to analysis done by Bank Negara, countries that had made similar moves only experienced an effect of about -0.0004% on their inflation rate.
posted by Toyers at
8:42 AM
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