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CONSUMER PROTECTION LAW IN MALAYSIA

BY
Dr.S. Sothi Rachagan and Susheela Nair
The law fails to extend consumer protection legislation to many forms of credit including leasing
(except under the general provisions regarding bailment in the Contracts Act 1950), credit and
charge cards, instalment payments, revolving credit, etc. Moreover, there is uncertainty as to what
law applies to many consumer credit transactions. The three statutes contain inconsistent provisions,
amongst
others,
in
relation
to:
Licensing
Control
of
advertising
Provision
of
information
to
consumers,
in
particular,
-information
pertaining
to
interest
and
other
charges
Regulation
of
exorbitant
interest
and
other
charges
Reopening
of
contracts
considered
unfair
Warning
about
legal
action
and
the
steps
to
be
taken
-prior to, at the time of, and subsequent to, the issue of warning; and
- Use of the credit-leverage for tie-in sales such as insurance.
The statutes also reveal a lack of consistent policy in relation to sanctions for infringement - in some
instances the law provides criminal sanctions and in others offers only civil remedies. Where it does
provide criminal sanctions the penalties provided for are inconsistent. The interest of third parties is
inadequately provided for and guarantors are not equitably treated. The statutes are not all enforced
by the same agency and this has resulted in inconsistent application of the laws. The law relating to
advertising and credit remain unchanged by the Consumer Protection Act 1999.

Until the enactment of the Consumer Protection Act 1999, the law on product safety in Malaysia was
found in several piecemeal legislation dealing with specific products, for example:
Sale
of
Drugs
Act
1952
and
the
Control
of
Drugs
and
-Cosmetics
Regulations
1984.
Electrical
Inspectorate
Act
1983
and
the
Electrical
-Inspectorate
Regulations
1984.
Pesticides
Act
1974.
Poisons
Act
1952.
- Radioactive Substances Act 1968.
These laws provide safeguards over the sale and distribution of these products; the appropriate
authorities have to approve or register these products after satisfying themselves that they meet
certain established standards, while the use of some products may be restricted. The Consumer

Protection Act 1999 has provided a general law on products safety aimed at those areas not already
covered by the specific statutes enumerated above.
Malaysia has an effective national body, the Standards and Industrial Research Institute of Malaysia
(SIRIM), to do product testing and certification and develop product standards. SIRIM's role is
geared more to assisting the manufacturing sector to produce products that meet Malaysian and
international standards. It has no powers to enforce standards. It tests products voluntarily submitted
by manufacturers for a fee and sells them its standard marks if they meet the required standards
under its Certification Marketing Scheme. It is considered that with these labels, the manufacturers
may have an edge over other competitors in Malaysia. SIRIM does not collect accident statistics
related to consumer products, or develop mandatory standards for all manufacturers and importers
to comply with, or test products before they go on sale. The Consumer Protection Act now permits
the Minister of Domestic Trade and Consumer Affairs to specify mandatory standards.
Again, until the enactment of the Consumer Protection Act 1999, Malaysia did not have a
comprehensive and general statute on product liability. The law on product liability was expressed in
the law of contracts, the common law principles of the tort of negligence, and several statutes, the
most important of which is the Sale of Goods Act 1957. Both common law and statute provide
different rights of compensation for loss or damage caused by goods to different classes of people.
For a claim based on contractual or statutory liability, only the immediate party to the contract can
claim compensation and other affected persons such as the innocent bystander, a friend, or family
member who uses or receives the product as a gift has no right to claim. Hence, unless privity is
established, no liability arises. These persons are required to base their claims under the tort of
negligence. However, in view of the difficulty in proving fault, a claim based on tort would inevitably
face insurmountable complexities.
After ten years of discussion, and five years after its drafting, a more comprehensive statute entitled
Consumer Protection Act 1999 became law on 15 November 1999. The Act comprising 14 parts and
a total of 150 sections deals with selected areas of the law not yet provided for in other statutes; it
does not seek to repeal or replace existing law. However, by extending its protection only to
consumers it inevitably had the effect of differentiating the operation of general law, most significantly
the law relating to contracts and the law relating to the sale of goods.
The Act drew extensively from consumer protection statutes in other jurisdictions. Part II of the Act
dealing with Misleading and Deceptive Conduct, False Representations, and Unfair Practices is
based on similar provisions of the Trade Practices Act 1974 of Australia and the Fair Trading Act
1986 of New Zealand. Hence specific provisions pertaining to such conduct in relation to goods,
services and employment support a general prohibition of misleading and deceptive conduct. Part II
also deals with misleading indication of price, bait advertising, gifts, prizes, and free offers.
Part III of the Act deals with Safety of Goods and Services. It provides for the declaration of safety
standards and compliance with them. Also provided for is a general safety requirement for goods. A
special defences section is included - compliance with a requirement imposed by law or a standard
determined in accordance with the Act. For suppliers, the special defences are absence of

knowledge and absence of a reasonable ground to believe that the goods failed to comply with the
standard specified. Part III also confers the minister the power to declare any goods or class of
goods to be prohibited where such goods are likely to cause injury to any person or property or
otherwise unsafe. Such a prohibition order may additionally require the supplier to undertake
remedial measures including the recall of the unsafe goods at the supplier's own cost. This part of
the Act draws from the Trade Practices Act 1974 of Australia, the Fair Trading Act 1986 of New
Zealand and the Consumer Protection Act 1987 of the United Kingdom. Unfortunately, this part of the
Act does not apply to healthcare goods and food.
Part IV of the Act deals with offences, defences and remedies in relation to Part II and III of the Act.
Offences attract fines in the case where the defendant is a body corporate and fines and or
imprisonment in the case where the defendant is not a body corporate. A full range of defences
including reasonable mistake, reasonable reliance of information supplied by another where
reasonable precaution and due diligence have been exercised. Part IV also enables the courts to
void or vary the offending contract and provide for ancillary relief for the consumer by inter alia
ordering the refund of money and property, payment of the amount of loss and expenses incurred
and repair of the defective goods.
Part V of the Act that deals with Guarantees in Respect of Supply of Goods pertains to title,
acceptable quality, fitness for particular purpose, compliance with description, and sample. Included
are also guarantees as to price, repairs and spare parts and certain express guarantees by
manufacturers. Part VI deals with Rights Against Suppliers and Part VII deals with the Rights Against
Manufacturers in respect of guarantees in the Supply of Goods.
Parts VIII and IX deal with guarantees in relation to Supply of Services and the Rights Against
Suppliers. Parts V to IX of the Act are based very closely on the Consumer Guarantees Act 1993 of
New Zealand.
Part X of the Act is an adoption of the strict liability regime for defective products introduced in the
United Kingdom by the Consumer Protection Act 1987. Thus Malaysia has joined the increasing
number of countries that have been influenced by the EC Directive on Product Liability. Unfortunately
the Act does retain the exemption provided for agricultural produce. There is no maximum or
minimum amount for the total claims that may be brought against any particular producer. The
quantum of damages for personal injury or death are determined in accordance with the provisions
of the Civil Law Act 1956 and will therefore not be different than that available for these heads under
tort or contract law. What the law has provided is another head under which a claim may be founded
and introduced for it a strict liability standard.
Part XI of the Act provides for a National Consumer Advisory Council of government, producer,
consumer and other civil society representatives and academicians.
Part XII introduces an alternative redress mechanism styled as the Tribunal for Consumer Claims
comprising a Chairperson and Deputy from among members of the Judicial and Legal Service of the
public sector and other persons qualified for legal practice in the country. No lay membership is

provided for. The jurisdiction of the Tribunal extends to claims of up to RM10, 000 only though the
parties may by agreement submit claims in excess of that amount. Supplementary legislation entitled
Consumer Protection (the Tribunal for Consumer Claims) Regulations 1999 now provide for the
forms and other operational aspects of the Tribunal.
The Act provides that no party shall be represented by an advocate and solicitor at a hearing. The
Legal Profession Act 1976 (section 37 read along with section 38) however requires that a company
may be represented in a court only by an advocate and solicitor. This notwithstanding, the Consumer
Protection Act 1999 specifically provides for a corporation or an unincorporated body of persons to
be represented by its full time paid employee. Such a provision of course does not serve to preclude
a person with legal training being employed full time by the company to serve as its officer to appear
before the Tribunal on its behalf. The Act, it appears, recognizes the disadvantage that this can
occasion to the consumer and therefore provides: "Where a party is represented as provided under
subsection (3), the Tribunal may impose such conditions as it considers necessary to ensure that the
other party to the proceedings is not substantially disadvantaged." Since its inception the Tribunal
has had instances where it has had to deal with precisely this situation, i.e. where a legally qualified
employee has represented the corporation or unincorporated body. However, the Tribunal has not in
such instances relied on Section 108(4) to permit the consumer to have the services of an advocate
and solicitor.
It must be noted that in addition to this new mechanism there already exist in Malaysia a Small
Claims Procedure in the magistrates courts for sums of up to RM5, 000 restricted to actions brought
by individuals - corporations are explicitly barred. Also in operation in Malaysia are two industry
initiated ombudsman schemes - one for the insurance sector and the other for the banking sector.
A further two parts of the Act deal with enforcement and a number of miscellaneous matters.
The major flaw of the Act is that it excludes from its ambit a number of important matters of interest
to consumers, including the following:
(a) Professionals who are regulated by any written law (lawyers, doctors, dentists, engineers,
architects, nurse etc.) who are covered by separate statutes permitting either self-regulation or
regulation by an administrative agency are therefore not subject to the Act. More critically, healthcare
services provided or to be provided by health care professionals or healthcare facilities are similarly
excluded.
(b) At the time the Act was being debated the Multimedia Development Commission Act 1999 was
not yet in place and the Ministry presumed, erroneously that electronic commerce will be regulated
by that agency and consequently excluded it from the Consumer Protection Act 1999. The Act
therefore excludes any trade transactions effected by electronic means unless otherwise prescribed
by the Minister. The Minister is yet to make any such prescription and consequently there exists the
absurd situation that a consumer contract entered into by mail would be covered by the Act but not
an identical contract entered into by e-mail.

(c) Ideally, a comprehensive product safety policy should provide for surveillance of consumer
products on the market in order to identify product related injuries and analysis of unreasonable
risks, through data collection and other sources. Clearly, information derived from data collection
systems such as for home accident and injury-reporting relating to consumer products are vital to
develop standards on all consumer goods available in the market, be it manufactured locally or
imported. Thus, data collection systems of injury and death statistics related to consumer products
are an important source of such information. The Act does not make provision for such 'preparatory
action'.
(d) It is an essential element of any safety law that the scope of such law must extend to a wide
range of consumer goods not covered by specific legislation. However, the Act does not apply to a
person in respect of any defect in agricultural produce if such agricultural produce has not undergone
any industrial process. There currently exist no specific legislation to govern genetically modified
foods and other biotechnology products. The Act needs to be amended to provide for primary
agricultural produce to come within the meaning of a 'product'.
(e) The Act does not provide for public interest groups to bring an action on behalf of an aggrieved
consumer. Unlike the novel feature seen in many other jurisdictions such as in Thailand, India and
China that provides for consumers in obtaining legal aid and representation by consumer
organisations, the Act does not provide for it. The concept of locus standi or 'standing in courts' as
the term is commonly understood, being a procedural barrier created to prevent abuse of legal
process should perhaps be done away with in instances involving consumer disputes.
Consumer groups have lobbied for amendments to the Act. The shortcomings in the drafting that
have manifested themselves in implementation need to be cured.
Source:

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