Sugar manufacturer MSM Malaysia Holdings Bhd has urged the government to increase the price for sugar, arguing that Malaysia’s sugar is the cheapest in the world.
MSM group CEO Syed Feizal Syed Mohammad said there was a need for an upward price adjustment due to Malaysia’s sugar priced at RM2.85per kilogramme, which is lower than both Brazil and Thailand, the world’s top two sugar producers.
“We have gone to the government to explain the need for an upward price adjustment citing that Malaysia is now the cheapest retail market for sugar in the world. Our price of RM2.85 per kilogramme is lower than both Brazil and Thailand, the world’s top two sugar producers.
“We hope that Malaysia’s newly installed government will be able to see the rationale for an adjustment to retail prices which have virtually gone unchanged for the past decade,” he said in the company’s annual report for 2022 released today.
MSM posted a net loss of RM178.71 million on the back of RM2.57 billion in turnover for the financial year ended Dc 31, 2022, attributing the losses to prolonged margin compression for domestic controlled price retail segment and without any subsidy.
In the annual report, Syed Feizal said that in 2022, MSM revised all its average selling prices (ASPs) and premiums to reflect its input costs more accurately.
“This will help us protect our margins and manage our returns should input costs remain at the higher end of the spectrum going forward even as we continue to ramp up production. Our main challenge in this context is our retail segment which makes up about a third of our sales volumes and where we have little flexibility to address margin compression as prices are fixed,” he said.
When releasing its FY22 results on Feb 22, MSM noted that the supply to wholesale and retail of the consumer segment made up 40% of its business and for this particular segment it was operating with significant negative margin since the fourth quarter 2021.
“Over the last 10 years’ sugar refiners operated without subsidies and only received a miniscule price increase of 1 sen/kg. At a controlled price of RM2.85/kg, Malaysia is by far cheaper than leading sugar producing countries integrated with plantations and energy savings schemes such as Thailand at RM3.50/kg. Rest of Asia region retails between RM4.50 – 6.50/kg,” Syed Feizal said in a statement then.
As a joint industry, he said it has engaged the government since May 2021 for support in a proposed new price revision or subsidy.
“We are even ready to operate on a floating price basis but request the overdue intervention from the government. As essential food producers, local sugar refiners ensure food security while imports are not a sustainable option and are restricted to export quotas from their countries, particularly India, that may switch off to protect domestic needs,” he said
