KUALA LUMPUR (June 9): MSM Holdings Bhd aims to advocate for structural changes in its discussions with the government during the third quarter of this year, to tackle the country’s largest sugar refinery issue of negative margins, which the imposition of retail prices has caused.
“The retail segment is in the negative margin, which is quite significant, and we cannot afford to be cross-subsidising from the industry segment to the retail segment,” said MSM’s chief executive officer Syed Feizal Syed Mohammad in a press conference after the company’s shareholders’ meeting on Thursday (June 8).
He noted that the local sugar producer had not received any subsidies from the government in the last ten years.
The price controlled by the government is RM2.85 per kilogramme for coarse white sugar, and RM2.95 per kilogramme for refined white sugar. The commodity has seen a net increase of only one sen since 2013. There was an 11 sen increase in 2017 to RM2.95/kg before the price was lowered to its current RM2.85/kg in 2018 for coarse white sugar.
In comparison with regional peers, Malaysia’s retail sugar prices are the cheapest in the region, with the Philippines limiting its sugar price at RM8.50/kg, followed by Singapore and Vietnam both at above RM6/kg, Indonesia (RM4.40/kg), and Thailand (RM3.20 to RM3.50/kg).
Syed Feizal said the low price has largely affected MSM, which is the national refined sugar brand “Gula Prai” producer, on the back of higher refining costs.
“We are still going to engage with the government in quarter three to address the standard sugar [ceiling price],” he said, without elaborating on the price.
“I wouldn't say that we would not make any further hike; it all depends on the outcomes of government decision on the consumer retail segment, as well as input costs. Joint sugar industry has made a request for some adjustment (on sugar prices). Of course, the decision lies with the government and we will be re-engaging them in quarter three (of 2023),” he added.
Recently, the government has allowed two refiners —MSM and Central Sugar Refinery Sdn Bhd (CSR) — to sell fine sugar, a new type, at market price effective May 25. However, the existing ceiling prices remain on refined and coarse white sugar. Both MSM and CSR have to continue to sell the refined sugar at a ceiling price of RM2.95/kg, while the coarse white sugar at RM2.85/kg
Sugar is a controlled item under the Control of Supplies Act 1961 and Price Control and Anti-Profiteering Act 2011, with those who sell above the ceiling price facing a RM100,000 fine, three years’ jail, or both. Companies face a RM500,000 fine for the first offence.
MSM opened 2.5 sen or 2.7% higher at 93 sen on Friday, from its last closing of 90.5 sen on Thursday (June 8), valuing the group at RM664.3 million.