PKR: Subsidy removal gives sugar tycoons RM1bil more

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PARLIAMENT Sugar tycoons in the country, mainly the politically connected Syed Mokhtar Al Bukhary's Central Sugar Refinery, can chalk up profits of RM1 billion as a result of the government's abolition of the sugar subsidy in the 2014 Budget, Opposition Leader Anwar Ibrahim said today.

"Without the abolition of the subsidy, profit before tax for companies in this sector can go up by 20 to 25 percent," Anwar said when debating the budget in the Dewan Rakyat today.

He said sugar companies normally posted a nine percent pre-tax profit, but this increased to 15 percent once Syed Mokhtar's company entered the fray.

Central Sugar and Malaysian Sugar Manufacturing (owned by Felda Global Ventures) currently hold the monopoly over the sugar industry in the country.

Prime Minister Najib Abdul Razak last Friday announced the abolishment of the RM 551.25 million sugar subsidy, amounting to 34sen a kilogramme, in a bid to encourage Malaysians to be healthier.

Anwar (left) said that the rise in profits would be caused by a strengthening in the two companies’ monopoly in the sugar industry.

Anwar asked for the government to remove the monopoly in oder to allow a “free market mechanism” to take place.

“A liberalisation of the industry is needed in order to avoid a continuous monopoly and also stop sugar prices from continuously going up,” he said.

Anwar also questioned why Najib was “ashamed” to announce the increase in cooking oil prices that the people might face due to the RM505 million subsidy reduction for cooking oil, which was also in Budget 2014.

“Why did the government choose to reduce subsidy for cooking oil and then be silent about its consequences?” he asked.

He said that the reduction of subsidies will only serve to burden the people further while protecting “big corporates”.