PETALING JAYA: The head of a local hypermarket chain has called for the ceiling price of retail sugar to be abolished after news that the RM2.85/kg cap, which has remained virtually unchanged for the last decade, may be floated.
Mydin hypermarket managing director Ameer Ali Mydin said not only should the government allow a free market mechanism in the sugar market, it should also do away with approved permits (APs) for sugar imports to create a level playing field.
CGS-CIMB Research said last week the sugar refining industry is in discussions with the government to float the ceiling price of retail sugar, which has seen a net increase of only 1 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.
“The price has not been adjusted for many years and is substantially cheaper than those in neighbouring countries, which is leading to leakages,” said Ameer.
“The government should progressively allow a free market and open up the sugar imports. The APs, which are given to a privileged few, should also be done away with.
“If manufacturers are asking for the price of sugar not to be controlled, then the government should also open up imports to be fair.”
He said that if a free market system is implemented, the public will choose local manufacturers if sugar imports cost more, with the same applying vice-versa.
Meanwhile, economist Barjoyai Bardai of Universiti Tun Razak said ceiling price mechanisms create “a lot of distortions in the market”.
He said that while prices of food and beverages which use sugar are bound to increase if the ceiling price is lifted, this should be weighed against the health risks of excessive sugar consumption.
Noting that the sugar price in Malaysia is below the regional average, Barjoyai said having a free market in place would make for a more realistic price, and one that would benefit both manufacturers and consumers.
MSM Malaysia Holdings Bhd is in a duopoly with Central Sugars Refinery Sdn Bhd in the local sugar refining business, with MSM enjoying a 60% market share to CSR’s 40%.
In a recent interview with The Sun Daily, MSM Group CEO Syed Feizal Syed Mohammad noted that Malaysia’s ceiling price of RM2.85/kg is cheaper than leading sugar producing countries such as Thailand, where sugar retails for RM3.50/kg.
He said sugar in the rest of Asia retails at between RM4.50 and RM6.50/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. - FMT
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