By Nigel Edgar
KUCHING, June 7: The Ministry of Domestic Trade and Consumer Affairs (KPDNHEP) has approved eight more permits for food and beverages (F&B) manufacturers in Sarawak to import sugar from their preferred suppliers overseas.
When the new policy was introduced by the Pakatan Harapan (PH) government late last year, one F&B manufacturer in Sarawak was given the permit, too.
Deputy Minister of Domestic Trade and Consumer Affairs Chong Chieng Jen today advised Sarawakian and Sabahan F&B manufacturers, especially those from small-medium enterprises (SMEs), to apply for the permit to reduce their production cost.
He said gone were the days where only two local sugar refineries in West Malaysia were allowed to wholesale sugar in the country, resulting in price manipulation that affected production cost of food and beverages manufactured in the two Borneo states.
The main benefit for food and beverage manufacturers to import sugar on their own is a reduction in production cost. At present, the international sugar price is in the range of RM1.30 and RM1.40 per kilogram (kg) of raw sugar and RM1.80 per kg of refined sugar.
“Because of the policy of the previous government, food and beverages manufacturers in Sarawak were not allowed to import sugar.
“So, they have to purchase from the only two permitted sugar refineries in Malaysia — MSM Malaysia Holdings Sdn Bhd and Central Sugar Refinery Sdn Bhd. The price the Sarawak manufacturers got, despite the international sugar price, was between RM2.60 and RM2.70 per kg, respectively.
“So, we understand that this is definitely an unnecessary cost to the food manufacturers in Sarawak. Because of the volume and transport cost, these two refineries were unwilling to reduce their selling price to the food manufacturers in Sarawak.
“As a result, our food and beverage manufacturers were getting high prices all these years,” he told a press conference at the Sarawak KPDNHEP office here today.
Chong said the new policy was introduced late last year with 20 F&B manufacturers, where one was from Sarawak, being given the permits to import sugar directly from their preferred sources overseas.
However, Chong pointed out that only manufacturers of food and beverages products were allowed to apply for the direct sugar import permits, not wholesalers or retailers. He added that at the moment, the policy instituted a 60/40 policy, where the manufacturers are allowed to import not more than 60 per cent of their sugar from their preferred suppliers.
He also explained that it was not economically viable to set up a sugar refinery in Sarawak yet because the demand is not high enough.
“Our (Sarawak) demand for sugar is not sufficient to sustain the operation of a refinery here. This is a commercial consideration because if you set one here and there is not enough demand, you would have to sell elsewhere, and this will involve additional logistical cost, which the refineries in Sarawak can’t compete with those in West Malaysia.
“For them, it’s just single handling all the way to the consumer side. For us here, we have to double handle because we have to go by ship (to Sarawak). But now, we are opening up the market to allow food and beverages manufacturers (in Sarawak) to import (sugar) directly from overseas. That will at least result in some savings of between 60 and 70 sen per kg,” said Chong, adding that he did not have figures at hand on how much sugar was being consumed in Sarawak.
He hoped that with cheaper production costs, local food and beverages manufacturers in Sarawak would be able to compete with their counterparts in West Malaysia, and even globally.
This competition, Chong added, would also allow local Sarawak products to be able to be marketed globally without concerns of high-production cost. — DayakDaily