Friday 29 Mar 2024
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(April 17): Sarawak DAP chairman Chong Chieng Jen has questioned the fixing of the retail price of sugar at RM2.80 per kg when it should be at RM1.60 to reflect the prevailing low price in the global market.

The Bandar Kuching MP said the retail price would drop to RM1.60 per kg if Putrajaya were to end the importation of sugar in the hands of four Umno-linked companies and abolish the price-fixing policy for the commodity.

In calling for an open market where any trader could freely import sugar, Chong said it was an irony that while on the one hand the government was talking about prosecuting businesses engaged in profiteering, on the other it was condoning and assisting the “biggest profiteering activity in the country” by protecting the interests of the four licensed importers.

He named the four companies as Malayan Sugar Manufacturing Company Bhd (MSM), MSM Perlis Sdn Bhd, Central Sugar Refinery Sdn Bhd (CSR) and Gula Padang Terap (GPT).

MSM, Chong said, holds 45% of the sugar market share in the country; MSM Perlis, 27%; CSR, 14%; and GPT the remaining 14%.

“In June 2014, when I raised the question in parliament on the government’s rationale for setting the price of sugar at RM 2.80 per kg given the average global price was RM 1.40 per kg, the response by the finance minister was that the four companies had entered into a long-term contract with their international supplier in year 2011 for the supply of sugar for three years, from 2012 to 2014.”

Chong said the international sugar price peaked in 2011, averaging US$ 0.27 (RM0.98) per pound or US$59.4 per kg with the price falling in the subsequent year from US$0.22 per pound or US$0.484 per kg in 2012 to US$ 0.17 per pound or US$0.374 per kg in 2014.

He said despite the drastic fall, the price of sugar supplied by the four companies remained high.

“By end of 2014, this long-term contract had expired and the four companies are free to import sugar at the prevailing market prices,” he added.

Chong said that in January this year, the international sugar price was US$0.1506 per pound “which is only RM1.19 per kg” and in February the price was US$0.1451 per pound or RM1.14 per kg.

“Compared with the 2011 international sugar price or the price set in the long-term contract, the present international sugar prices have dropped by 45%.

“Yet, in Malaysia, the retail sugar prices remain at RM2.85 per kg.

“By right, the retail sugar prices in Malaysia should by now be RM1.60 per kg,” he said.

Chong alleged the four companies were “making an unreasonable extra profit of at least RM1 per kg”.

“Sugar consumption in Malaysia is about 1.7 million tons per year. With an unreasonable extra profit of RM1 per kg, it means that they will be making an unreasonable extra profit of RM1.7 billion a year.

“This will surely make them the biggest profiteers in Malaysia. Worse still, it is with the consent of the government.”

Chong alleged that even before the expiry of the long term contract, the four companies had been making “unreasonable extra profit” between 2012 and 2014.

“This is because the LTC only supplied a portion of the nation’s sugar demand, while the remaining demand was supplied through import of sugar at then prevailing prices which are much lower that the price set under the LTC.

“In the recent March parliament sitting, I asked the question on the rational for the government to fix the price of sugar at RM2.85 given that the LTC has expired.

“The reply was that this high price is required to cover the costs of storage, re-packaging, transportation etc.

“The answer does not explain the most important query, i.e. RM2.85 per kg was the price when supply of sugar to these four companies was at US$0.27 per pound.

“Now that the international sugar price has dropped to US$0.15 per pound, why is our sugar price still fixed at the same RM2.85 per kg?” – The Malaysian Insider

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