KUALA LUMPUR (June 12): Local sugar refiners have strongly urged the Government to reconsider its decision to approve the import permits (APs) for eight food and beverage (F&B) manufacturers in Sarawak and engage the industry for a longer-term solution to its predicament.
MSM Malaysia Holdings Bhd in a statement today said the decision was made without fully understanding the background and current responsibilities of the domestic sugar industry and the mid- to long-term impact on the sugar supply and food security in the country.
“The short-term, populist move to allow sugar imports will only force the industry to cut costs to survive. This includes reducing the security stock cover for the nation and closing loss-making factories to reduce costs and capacity.
“This will inevitably have a negative impact on the country in the mid to long term, especially when the global sugar price increases. This is a risk that our nation cannot afford to take,” it said.
At RM2.85 per kilogramme, MSM said the retail price of refined sugar in Malaysia was among the cheapest in the world.
“The sugar price is even cheaper than raw sugar in producing countries like Thailand, Indonesia and the Philippines, and lower than countries that have a lower per capita income like Cambodia, Vietnam and many more,” it added.
MSM said local sugar refiners have been absorbing the volatility and price differences between the world market and the local ceiling prices, including foreign exchange factor for many years and this was the main cause of the losses suffered by some factories, and not inefficiencies as stated recently.
“Sugar is a strategic commodity in almost all countries globally, acting as a critical ingredient for many manufacturers. The local sugar refiners have seen how the shortage of sugar can be detrimental to a country’s economy and how governments around the world would deliberately ensure adequate supply,” it added.
In this regard, MSM said sugar refiners in Malaysia would hold stocks of two to three months valued at between RM180 million and RM210 million to ensure adequate supply in the market at a cost of between RM7 million and RM20 million a year, which has become part of the cost borne by the sugar refiners.
In addition, to ensure consistent supply, it said local refiners had invested heavily into the five sugar refinery plants, which are capable of producing a total capacity of three million tonnes per year, exceeding the current domestic demand of 1.5 million tonnes per year.
It said over the years, local refiners had been operating on thin margins and had absorbed most of the price impact on consumers in order to ensure the stable supply of sugar to the nation.
On top of that, local refiners are also responsible corporate citizens, paying tax and zakat to the government without fail every year.
“MSM and Central Sugars Refinery Sdn Bhd would like to invite the Deputy Minister of Domestic Trade and Consumer Affairs to visit the plants to understand the efficiency and productivity of these facilities, which have been instrumental over the last 55 years in ensuring the stability of the domestic price of sugar, backed by adequate supply for local consumption.
“We are looking forward to input from the Deputy Minister as to the details of efficiency improvement that he has suggested we look into,” it added.