Govt acknowledges providing incentives to sugar producer after stopping sugar subsidies

KUALA LUMPUR: The government acknowledged that it has provided “incentives” to a sugar producer, despite having stopped subsidising sugar since October 2013, when Datuk Seri Dr Wee Ka Siong asked for clarification in the Dewan Rakyat.

The Ayer Hitam MP raised the concern when Finance Minister II Datuk Seri Amir Hamzah Azizan was addressing questions when debating the Supplementary Supply Bill (2023) 2024 at the committee level.

“You mentioned subsidy and it is relevant since we are debating the Supplementary Supply Bill.

“We came to the answer that the government has stopped subsidising sugar since Oct 26, 2013.

“However, in a report by The Edge, MSM received RM48mil in special incentive from the government, which saw it move from suffering losses to making a profit,” he said, referring to sugar producer MSM Malaysia Holdings Bhd.

The MCA president questioned the government’s decision to impose excise duty on sugary drinks from 40sen to 50sen per litre, further highlighting the flip-flop policies about sugar.

“I want to ask, are we continuing with the sugar subsidy, like what is done (incentive given to sugar producers)?

“Why does the Domestic Trade and Cost of Living Ministry say otherwise?

“What is our direction? What is the ministry’s view about this, because it will affect all of us health-wise,” he said.

In a reply, Amir Hamzah said the payment of financial incentives to the sugar producer was “temporary”.

He said the incentive was given to ensure continuous supply and maintain sugar prices for consumers, considering the global sugar prices that had soared and impacted local producers.

However, Amir Hamzah did not say whether the incentives were still being paid to the company.

Last year, the government allowed two local sugar-producing companies, MSM and Central Sugars Refinery Sdn Bhd (CSR) to produce clear refined white sugar effective May 25.

MSM and CSR were told to continue producing refined white sugar at the quantity of 42,000 tonnes per month.

According to a report from BIMB Securities Research, despite Malaysia’s controlled sugar price being the cheapest in the region and globally, local sugar producers are obligated to meet a minimum monthly quota of 24,000 tonnes.

To address this challenge, it said MSM has received RM1,000 per tonne in a special incentive for November and December 2023 for coarse granulated sugar (CGS) for 1kg and 2kg packs, and fine sugar for 1kg packs, to cover their cost losses.

This financial incentive has translated into an additional RM48mil and helped turn the company around with a net profit of RM42.87mil for the fourth quarter ended Dec 31, 2023 (4QFY2023), after it had been loss-making for eight consecutive quarters.

The company also attributed the improved earnings performance to the special incentives from the government.

In a Facebook post on Wednesday (March 20), Dr Wee questioned if such a financial incentive was not a form of subsidy.

“Incentives instead of subsidies? Are the incentives temporary? For how long?

“Who can explain the meaning of report, which says the company had gone from suffering losses to making a profit?

“Do all the sugar producers get a financial incentive too?” he asked.