Aug 16, 06 1:04pm
The Federation of Malaysian Consumer Associations (Fomca) has questioned the rationale of allowing just four companies to import and refine raw sugar, saying the system must be partly blamed for the nationwide sugar shortage.
Director of communications Mohd Yusof Abdul Rahman said the refiners import sugar through a Long Term Contract (LTC) with stated quotas and pricing, as well as at open market prices from the main producers.
Derivatives such as refined, brown and castor sugar are then produced for export and local distribution.
“We don’t see why the country should limit ownership of sugar refineries to four companies, which are controlled by just two people - ‘Sugar King’ Robert Kuok and Syed Mokhtar Al-Bukhary,” he said.
Kuok, through his listed flagship Perlis Plantation Group Bhd, controls Malayan Sugar Manufacturing and Kilang Gula Felda Perlis, a joint-venture with the Federal Land Development Authority.
Syed Mokhtar, through Tradewinds (M) Bhd, controls Central Sugar Refinery and Gula Padang Terap.
Fomca believes that the four companies should be monitored closely to determine if enough sugar is being allocated for domestic needs, since higher prices in neighbouring countries make exporting a more attractive option.
“How difficult is it to monitor four companies?” Mohd Yusof asked.
A Malay-language daily recently quoted a source in the domestic trade and consumer affairs ministry as tracing the sugar shortage to the Approved Permits (APs) issued by the international trade and industry minister for raw sugar imports.
The source further alleged that refineries have been exporting refined sugar to capitalise on the higher prices abroad, or are producing other types of sugar - one was said to have used its entire 56,000-tonne quota from the LTC to produce gula merah, brown sugar and icing sugar.
On July 18, however, national news agency Bernama quoted International Trade and Industry Minister Rafidah Aziz as deflecting criticism levelled at the refiners, by denying the existence of APs.
She said the refineries are producing the tonnage of refined sugar required for domestic needs and blamed the distribution system, smuggling and hoarding by wholesalers and retailers as the main causes of the shortage.
Mohd Yusof said both ministries, instead of assigning blame, should work towards a solution - whether it is to restrict the export quota, increase the number of refineries, break the 10-year retail price ceiling of RM1.40 - RM1.45 per kg, or exert greater vigilance over the movement of sugar by refineries and wholesalers.
“Fomca has been asking for legislation along the lines of a Fair Trade Act for many years. This will address a lot of issues, such as putting in place mechanisms and procedures to prevent hoarding and profiteering,” Mohd Yusof said.
“We feel this is urgent because sugar is just one of the controlled essential items. Other essentials such as rice and flour could face similar problems in future. We also feel that essential items should not be in the hands of monopolies.”
An industry source pointed to manufacturing and distribution as the ‘choke points’, saying that structural issues need to be resolved.
Until these are tackled, he warned, enforcement efforts at the wholesale level will not make much difference and “not one grain of sugar will reach the shelves to satisfy consumer needs”.
16 August 2006