KUCHING (June 14): The government will not reconsider its decision to grant sugar import permits to Sarawak food and beverage (F&B) manufacturers, said Deputy Domestic of Trade and Consumer Affairs Minister Chong Chieng Jen.
On the contrary, he said a little competition in the sugar industry would do more good than harm to the country, the business sector and the consumers at large.
“It is the general policy of the Pakatan Harapan government to encourage more competition, reduce costs of doing business and enhance efficiency in all sectors.
“In this globalised market, no country can afford to have protectionist policy go on forever…. Such protectionism will surely breed inefficiency for which the general public will be forced to bear the unnecessary costs,” he said in a statement here today.
He was responding to a statement issued by MSM Malaysia Holdings Bhd and Central Sugar Refinery Sdn Bhd yesterday that said approval of the import permits for eight Sarawak F&B manufacturers was made without fully understanding the circumstances of the industry.
Chong, however, said these two sugar refiners had enjoyed “monopolistic control” over the sale and supply of sugar in Malaysia’s domestic market.
With the new policy to allow the F&B manufacturers in Sarawak to directly import sugar from foreign sugar refiners, it would provide substantial savings for these manufacturers and reduce their business costs, he said.
According to him, the international raw sugar price has fallen by more than 35% from US$0.45 per kg in February 2017 to less than US$0.30 per kg in February 2018 until now.
In its annual report, MSM indicated that raw sugar constituted 88% of its production costs for refined sugar.
“Yet, despite the huge fall in its production costs for more than one year, the proportionate benefits of the reduced price were not passed on to the F&B manufacturers, especially for the F&B manufacturers in Sarawak who have no bargaining power vis-à-vis the two sugar refineries, due to the former’s relatively small volume of purchases,” he said.
Chong appealed to the two refiners to improve the efficiency of their sugar refinery business and to offer cheaper and fairer sugar prices to other businesses and F&B manufacturers in Malaysia.
As for their proposal to close down some of their loss-making factories, he said the ministry might be able to assist in finding some investors to take over the factories and facilitate the application for a new sugar refinery licence from the relevant authorities.
He said this would also increase the number of refineries in the country and thereby increase the competition for the benefit of the other related business sectors and consumers at large.
Another reason provided by the refiners is they have the obligation to hold stocks for food security reason and that it costs them RM7 million to RM20 million annually to hold stocks.
He said Malaysia’s local sugar consumption was 1.5 million tonnes per year, which meant that jointly, the two refiners’ annual revenue from the sale of sugar was more than RM3 billion.
“RM7 million to RM20 million is less than one per cent of that revenue. Surely it does not justify the extra RM1,000 profit per tonne (compared with) the reasonable price of RM1,700 per tonne,” he said. — Bernama