KUCHING: Putrajaya has shot down the request of two sugar refiners in the Peninsula to reconsider granting sugar import permits for Sarawak-based food and beverage manufacturers.
Domestic Trade and Consumer Affairs Deputy Minister Chong Chieng Jen said the government has decided not to reconsider its decision as it believed that a little competition in the sugar industry would be beneficial for the country, the business sector and consumers.
“So far, the two sugar refiners, MSM Malaysia Holdings Bhd (MSM) and Central Sugar Refinery Sdn Bhd (CSR) have enjoyed monopolistic control over the sale and supply of sugar in Malaysia’s domestic market.
“This is another of the previous administration’s legacy,” he said in a statement today, adding that it was the general policy of the Pakatan Harapan Government to encourage more competition, reduce costs of doing business and enhance efficiency in all sectors.
He pointed out that international raw sugar prices have fallen by more than 35 per cent from US$ 0.45 per kg in February, 2017 to less than US$ 0.30 per kg since February 2018 till now.
“In its annual report, MSM indicated that raw sugar constitutes 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.
“This is especially the case 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,” said Chong.
He said the new policy allowing Sarawak food and beverage manufacturers to directly import sugar from foreign refiners would provide substantial savings for them and reduce their costs of business.
The Federal government recently issued permits to import sugar to eight food and beverage manufacturers in Sarawak, who previously had to obtain their supplies from the two sugar refineries at between RM2.60 and RM2.70 per kg.