There's no sugar monopoly in Malaysia, say refiners

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KUALA LUMPUR (July 12): MSM Malaysia Holdings Bhd and Central Sugars Refinery Sdn Bhd (CSR) issued a joint statement today to say that the sugar industry is not a monopoly market.

The statement came after Putrajaya announced that a special task force would be set up to disband monopolies across all industries in the country.

The two refiners said there are currently two sugar refiners in the country, namely themselves. MSM is a unit under FGV Holdings Bhd, while CSR is a unit under Tradewinds (M) Bhd. The two operate five sugar refinery plants, including a new plant in Tanjung Langsat, Johor, which is scheduled to start operations this month.

"The current total capacity of the existing four refineries is 2 million metric tonnes per year. Domestic demand in Malaysia is approximately 1.5 million metric tonnes per year, leaving Malaysia with an excess capacity of 500,000 metric tonnes per year. With the upcoming new refinery in Johor, total capacity will be 3 million metric tonnes per year," the companies said.

Apart from local brands, the refiners also said there are importers that bring in and market a variety of sugar brands in Malaysia, including SIS, Taikoo, Waitrose, Billington, Tate & Lyle, which results in a competitive market.

"As part of the local refiners' duty to ensure sufficient sugar supply for Malaysia, a certain amount of sugar is stockpiled to ensure adequate supply even during high world raw sugar prices," they said.

"Due to the relatively lower world raw sugar prices today, many opportunistic parties that operate without the overheads and responsibilities that local refiners have, are trying to import sugar and profit from the low prices," they added.

MSM and CSR said these companies may not have the necessary certifications, such as the 'HALAL' certification, and that they will likely cease operations once the world raw sugar prices go higher than the ceiling price.

"It will then be left to local sugar refiners to address the instability by the void left behind by these opportunistic players. Local refiners operate within a challenging business environment to ensure a steady sugar supply to Malaysian consumers, while maintaining a decent sugar stockpile for the nation," they said.

They also stressed that the industry is adversely affected by illegal activities like sugar smuggling and infiltration of illicit sugar which are threats to those with the HALAL certification, quality control and other mandatory certification requirements.

On top of these challenges, MSM and CSR pointed to rising cost of doing business, with the minimum wage, gas and electricity tariff on the rise, although the ceiling price for refined sugar has remained.

Currently, the ceiling price for coarse grain sugar (Gula Pasir Kasar) is set at RM2.95 per kg, while fine granulated sugar (Gula Pasir Halus) is set at RM3.05 per kg.