Economy and health to benefit from sweet subsidy cut

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AS a handout-minded society, Malaysians are a pamperd lot when it comes to buying goods at below market price.

 

The mere mention of reduction or removal of subsidies is usually enough to blow up a storm of protests.

Interestingly though, the increase in sugar price has raised few hackles. In fact, some quarters have flashed the thumbs-up to the Domestic, Trade and Comsumerism Ministry for the spiking the price of both coarse and fine sugar by 20 sen per kg.

Slashing the ‘sweet’ subsidy will entail a RM116.6 million savings for the government  since sugar price was allowed rise last year.

The government can save even more with a bigger chop of the subsidy.

Malaysians consume an average of 26 teaspoons of sugar per day, yet sugar, being nutrient-free, is not a basic necessity.

Moreover, when sugar prices are high, people will be put off eating the stuff. This will lead to a reduction in health problems as sugar is linked to over 60 ailments. In essence, the government can save millions in health costs with less sugar consumption.

It does not make sense subsidising the very substance that is harmful to health when the money can be better spent elsewhere.

Thus, there is good reason for government to stop the subsidy and let sugar be sold at market price.

But the fact remains that most Malaysians are incorrigible sugar lovers. Last year alone, 60 per cent of the 1.2 million tonnes of sugar imports was taken up by households and retailers.

We are a nation that go gaga over sugar and our sweet tooth is not only burning a big hole in the government’s coffers but also harming our health.

Just look at the Health Ministry stats — 14.9 per cent of Malaysians are diabetic, up from eight per cent of the population in 1996 compared with just nine per cent for China which has over one billion people.

Studies also showed obesity among Malaysian adults had increased from 4.4 per cent in 1996 to 14 per cent in 2006. Obviously, our voracious appetite for the sweet stuff is responsible for these ominous figures.

Health issues aside, the sugar price hike is underpinned largely  by economic considerations. It’s part and parcel of the government’s plan to gradually rationalise subsidies for so-called essential commodities.

Prime Minister Datuk Seri Najib Razak has conceded many might not agree with subsidy reform but it is a long-term necessity to reduce the country’s budget deficit to 5.3 per cent of GDP this year from seven per cent in 2010.

dThereafter, the shortfall is forecast to ease to 2.8 per cent by 2015.

The rise in sugar costs could spark price pressures in the economy. The most recent data showed inflation edging up to 1.6 per cent in May from 1.5 per cent in April.

Lately, in an apparent inflation-curbing move, Bank Negara raised its key policy rate for the third time this year as economic conditions improved significantly from a year ago.

The overnight policy rate jumped 25 basis points to 2.75 per cent on the back of an impressive 2011 first quarter which saw Malaysia’s economy growing the fastest in a decade.

GDP rose 10.1 per cent year-on-year in the first three months, outstripping the 4.4 per cent increase in the final quarter of 2009.

Notwithstanding the foregoing, as Malaysians become more aware of the hazards unfettered sugar intake poses to their well-being, they are likely to regard sweetened items, especially drinks, as something of a taboo.

Perhaps for this reason, orders of ‘kurung manis’ copi-o and  milo ‘kosong’ are very common at eateries nowadays.

Indeed, the sugar business has become less sweet. Some established sugar companies such as that of Malaysia’s richest man Tan Sri Rober Kuok, often dubbed the sugar king, have quit the business altogether, purportedly because trading in the commodity has become less profitable, especially after sugar became a controlled item — and now with the removal of government subsidy on which profitability of the business had largely depended.

Apparently, these sugar companies knew what they were doing when they decided to leave the business. As one columnist noted insightfully, they must have known it was time to go kosong as well.