Why is SUPP protecting the business interest of MSM and CSR at the expense of Sarawak F & B manufacturers?

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Press Statement by YB Chong Chieng Jen:

The Pakatan Harapan Government is liberalising the sugar supply policy in Sarawak to stop the monopoly of the 2 sugar refineries over supply of sugar in Sarawak and with the hope to reduce the costs of production in food and beverages (F & B) manufacturing sector in Sarawak.

Under the policy of the previous government, 2 companies have monopolised the supply of sugar in Malaysia, namely MSM Malaysia Holdings Bhd (MSM) and Central Sugar Refinery Sdn Bhd (CSR)。

In the last few years, international sugar prices have fallen. In fact, since 2012 (except for the 12-month period between the second half of 2016 to first half of 2017), international sugar prices was and is still below RM1.50 per kg. However, the BN government prohibited the importation of refined sugar to keep the 2 sugar refinery companies profitable.

As a result, the Sarawak F & B manufacturers were compelled to buy sugar from these 2 companies. While the international sugar prices have fallen to below RM1.50 per kg, the F & B manufacturing companies in Sarawak were compelled to buy sugar at the prices between RM2.40 – RM2.70 per kg from these 2 sugar refinery companies. This made our F & B manufacturing sector not competitive.

With the present liberalisation of sugar supply policy by the Pakatan Harapan Government, the F & B manufacturers in Sarawak (and including Sabah) can now directly import sugar from overseas sugar refineries at the price around RM1.50 per kg, thereby reducing its costs of production and making them more competitive for export market.

In allowing the importation of sugar by these Sarawak F & B manufacturers, the Ministry does not impose any condition for them to lower the prices of their products. It is entirely the discretion of these local F & B manufacturers to determine the prices of their products, taking into account their individual marketing strategies and the combination of market forces of demand and supply.

In fact, we have been practising free market economy all this while, unlike the communist countries in the past where prices of goods are controlled by the Government. Except for some controlled or government subsidised items such as petrol, diesel, LPG and subsidised 1 kg cooking oil, the Government leaves it to free market forces of demand and supply to determine the prices.

As a general economic principle, when the costs of production decreases, prices of goods will follow suit. But such effect may take some time to come through.

The main difference between the present PH Government and the past BN Government is that, the BN Government creates monopolies, thereby increases costs of business which ultimately leads to prices of goods increases, whereas the present PH Government breaks up monopolies, thereby lowering costs of business which ultimately helps to reduce inflation.

This change in policies may not have an immediate effect on price of goods, but in long term, it will definitely benefit the consumers.

Therefore, the Ministry of Domestic Trade and Consumer Affairs will continue with its liberalisation of sugar supply policy and open to applications by any F & B manufacturers in Sarawak, big or small, and we don’t need connection like it used to be during BN’s time. So far, all the 11 applicants who applied for these sugar import permits have got their import permits issued, some got more while other got less depending on their sugar usage in their line of production.

It is really very puzzling why the SUPP keeps opposing to this liberalisation of sugar supply policy? Is SUPP somehow connected to the 2 refinery companies, MSM and CSR? Why is SUPP protecting the business interest of MSM and CSR at the expense of Sarawak F & B manufacturers?

SUPP has been a component party of Barisan Nasional (BN) which created the monopoly of sugar supply in Malaysia by MSM and CSR. Is that the reason why the SUPP is now resorting to the all the smearing and lies about the PH’s current sugar supply liberalisation policy?

Despite all the lies and smearing by SUPP, the Ministry will continue with the liberalisation of sugar supply for F & B manufacturers in Sarawak and Sabah. We welcome more F & B manufacturers in Sabah and Sarawak to come forth to apply for the sugar import permits for their production. Do not be scared by the lies and smearing of SUPP.

Chong Chieng Jen
Deputy Minister for KPDNHEP