Dateline Southeast Asia

Malaysia: Manufacturer-backed sugar hike rejected by government

By RJ Whitehead

- Last updated on GMT

© iStock
© iStock

Related tags: Water, Irrigation

Malaysia will not increase the market price of sugar, despite a request to do so from one of the country’s most prominent companies and pressure from consumers’ associations to introduce a de facto sugar tax.

Last week, Malaysia’s biggest sugar producer, MSM Malaysia Holdings, called on the trade, cooperatives and consumerism minister, Hamzah Zainuddin, to raise the price of sugar by MYR0.29 (US$0.07) per kilo. 

Consumer groups in Selangor and Penang also weighed into the debate, in support of a sugar price hike. 

It appears that the price will not rise for the time being, though. Hamzah announced this week that it would stay put, especially as the global commodity price of sugar had fallen since Malaysia last increased the domestic price by MYR0.11 in March. 

So, why should we increase the price of sugar when the world market price has dropped?​” he said, in response to MSM’s request.

I told [MSM] firmly that the price of sugar could not be increased unless the company has made a big loss​.” 

Though closed now, the issue has reignited debate over how a sugar price hike could be used as a sugar tax.

Consumer groups see the move as a means to promote safer consumption of sugary foods while having a marginal effect on manufacturers.

One has suggested that any increase would be small enough to be absorbed by manufacturers, as long as it were policed properly by government inspectors.

Speaking to Free Malaysia Today​, Jacob George, president of a consumers’ association in Subang and Shah Alam, voiced his hope that the domestic trade, cooperatives and consumerism ministry would play its part in ensuring no profiteering and no undue increase in prices of related items. 

Meanwhile, Dr Jacob’s counterpart in Penang, SM Mohd Idris, said its own group’s research had shown that most consumers will choose healthier options.

Even our data survey found six out of 10 people opt for a less sugary option when they go to restaurants and coffee shops​,” Idris said. 

For the past 20 years, the association has been talking about sugar-related diseases. So, we’ve always wanted the sugar price to go up​.”

MSM, for its part, has been hit by raw sugar price volatility and a poorly performing ringgit. To ensure profitability this year, its chief executive recommended an increase in the government-mandated selling price of MYR2.95 per kilo to MYR3.24.

Zakaria Arshad said the current price was manageable while the world price was relatively low, though “it will be very difficult for us​” if the price increases.

Even Thailand, which is a raw sugar and sugar producer, is selling the product at a higher rate than us​,” he added.

More from Southeast Asia…

Indonesia granted $600m irrigation loan from the ADB

The Asian Development Bank has approved a US$600m loan to support an Indonesian programme to improve irrigation and boost food security in poor rural areas. 

ADB

Money from the Manila-based multi-governmental bank will finance irrigation improvements in 74 districts across the country. These will focus on improving irrigation system operation, maintenance and water delivery to farmers. 

The programme will help farmers in these districts by improving water delivery to their farms​,” said Eric Quincieu, an ADB water resources specialist. 

The aim is to improve the incomes and livelihoods of these rural communities, as well as to help Indonesia achieve sustainable and more productive irrigated agriculture​.” 

Though agricultural production has been growing, the country is still experiencing rising imports, higher domestic prices and sporadic shortages of food. 

The Ministry of Public Works and Housing, which oversees irrigation infrastructure, estimated in 2014 that only 55% of the nation’s irrigation system is functioning at full capacity. This has been limiting yields and reducing cropping intensity. 

Meanwhile, climate change exacerbates the country’s effort to increase food production,  and the availability of water for irrigated agriculture is erratic in many areas. 

The ADB loan will focus on enhancing the performance of irrigation systems and attracting the participation of farmers, to help improve water delivery. 

To ensure sustainability, it will help improve asset management, budgeting and planning of the irrigation infrastructure. It will also introduce high-level technologies and climate resilience measures to improve irrigation service delivery, including water management services. 

Tetra Pak opens Singapore innovation centre 

Packaging major Tetra Pak has opened its first Asian customer innovation centre at its Jurong site in Singapore.

Tetra Pak

The facility will be used for food and beverage manufacturers to “uncover growth opportunities​”, work on prototype product formulations and customise packaging designs before taking their products to market. 

With a dynamic, fast growing and increasingly complex market with increasing cross-border trade, Asia’s brand owners need a stronger focus on customisation, innovation and speed-to-market, said Bert Jan Post, Tetra Pak’s regional vice-president of marketing and product management. 

The Singapore customer innovation centre was created to partner with our customers in addressing these challenges. It provides customers with the entire innovation journey under one roof, significantly increasing the speed and probability of their success​,” Post added. 

The third such facility in Tetra Pak’s expanding global network, following its American Denton site and another in Dubai, the centre will give customers access to “subject-matter experts from across the world​”. 

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