Anwar calls for end to SUGAR MONOPOLY, Bung calls for LOWER GST rate

KUALA LUMPUR - The government should liberalise the sugar industry and remove the monopoly to allow for a free market mechanism to take place, said Opposition leader Datuk Seri Anwar Ibrahim.

He said the government's move to cut the sugar subsidy will only benefit two companies - Central Sugar Refinery owned by Tradewinds and Malaysian Sugar Manufacturing owned by Felda Global Ventures.

Anwar said the gross income for the sugar industry is around RM4 billion a year and usually, the profit before tax is around 9%.

"However, after the entry of Tan Sri Syed Mokhtar Al-Bukhary's company (Central Sugar Refinery) into the sector, the profit before tax has jumped to 15%.

"With the removal of the subsidy, the profit before tax for companies in this sector is expected to jump between 20% to 25% with a collective profit of close to RM1 billion due to the monopoly by these two companies.

" The question here is why must corporations get so much profit due to the removal of the sugar subsidy but the people are burdened with the increased sugar price," said Anwar in his speech on the 2014 Budget tabled by Prime Minister Datuk Seri Najib Abdul Razak on Friday.

Najib had announced the abolishment of the RM551.25 million sugar subsidy.

He had reasoned that many Malaysians under the age of 30 were diabetics, thus such a move will encourage more people to practice a healthier lifestyle.

Anwar said Najib's statement was not supported by facts.

" If that's the case, then the subsidy for rice should be reduced as well because carbohydrates also contributes to diabetes," he said.

Anwar said the government's move to implement the Goods and Services Tax (GST) will also further contribute to income inequality and will widen the gap between the rich and the poor.

"GST is regressive. It can be the main cause of inflation," he said.

Citing a study by CIMB Research, Anwar argued that the implementation of GST will contribute to a 5% increase in inflation due to a lack of enforcement laws.

Najib in his Budget speech had also announced the introduction of GST at a 6% rate beginning April 1, 2015.

Meanwhile, Datuk Bung Mokhtar Radin, during the debate on the Budget suggested that the government should introduce GST at a lower rate.

"I propose the government introduce GST at a rate of 5% because this is something new, you don't want to shock the people with the high rate," he said.