This article first appeared in The Edge Malaysia Weekly on November 13, 2023 - November 19, 2023

Federal Land Development Authority (FELDA) chairman Datuk Seri Ahmad Shabery Cheek is wrong to state that the rising global price of sugar will cause losses to settlers if the government does not revise the ceiling price in the domestic market.

First, the settlers do not have any management control or direct ownership of MSM Malaysia Holdings Bhd, which is one of two sugar refineries in the country. MSM’s major shareholder is FGV Holdings Bhd, which in turn is substantially held by FELDA.

Any loss or gain at the MSM level is confined to the company itself.

Secondly, FELDA runs various programmes to assist settlers using the returns from its investments, including in FGV, which is its flagship company. Apart from the proceeds from its investments, FELDA also gets direct assistance from the government to help settlers.

For the record, FGV made losses in 2018 and 2019 and recorded paltry profits in some years. But the losses did not have any bearing on the welfare of the settlers. In any event, the government has always been there as a “social safety net” to ensure the settlers are not affected by the poor performance of FELDA’s investments.

MSM’s mandate as one of the two sugar refineries is to ensure that there is adequate supply in the domestic retail market at RM2.85 per kg. The mechanism is such that the government helps it procure raw sugar at a preferred rate and, in return, the refiner is to ensure that the price of the essential product is stable and there is adequate supply.

While raw sugar prices have admittedly gone up significantly and eroded operating margins, the question to ask is whether MSM itself is efficient as a refiner.

It built excess capacity that has not been utilised and is having problems with its operations, especially in Johor.

If FELDA finds handling MSM a problem, it should let others do the job by disposing of the asset to the highest bidder. And the government should ensure that there are no changes to the terms and conditions of MSM’s mandate, should there be a change in ownership.

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