Monday, January 30, 2012

Pua calls govt's bluff over 'skyrocketing' sugar price

31 January 2012

The claim that the government's subsidy for sugar increased has been questioned by a member of parliament who said global sugar price was tumbling.In response to Domestic Trade, Cooperatives and Consumerism minister Ismail Sabri Yaakob’s claim that sugar subsidies were increased due to skyrocketing global sugar price, Petaling Jaya Utara MP Tony Pua (right) pointed out that world sugar price had significantly dropped.Sugar price was increased by 20 sen in May 2011 to RM2.30 per kilogramme. Since January 2010 when its price stood at RM1.45/kg, there has been a 58.6 percent increase within just 18 months as part of the government’s subsidy removal exercise."What is extremely intriguing, however, was that global sugar prices over the past 6 months since the last price hike in May 2011 had in fact declined significantly, and not the purported ‘skyrocket’,” said Pua in a statement made available to Harakahdaily.Ismail earlier claimed that the government had to pump in extra 34 sen per kilogramme in subsidies for sugar to maintain the price at RM2.30 per kg due to pricier sugar price.“World prices have increased but we have decided not to raise the price here. We are doing what we can to reduce the people's burden,” said Ismail (left).Furnishing details, Pua said sugar price dropped 20.5 percent after hitting a peak of US$29.47 per hundred pounds in July 2011.Taking into account the 7 percent depreciation of the ringgit against the dollar over the past six month, Pua said the global sugar price would still have declined by 13.5 percent based on ringgit terms.Based on the calculation, Pua said the government's subsidy would also drop.“What is more perplexing is the fact that our subsidy had to increase by 170 percent to cope with the non-existent 'skyrocketing' global price of sugar,” he chided.According to Pua, 99 percent of Malaysia’s raw sugar requirements were imported and the local market was monopolised by only two refineries, the Malayan Sugar Manufacturing Holdings (MSM Holdings) and Tradewinds Corporation Bhd, which also acts as importers. These companies, revealed Pua, were linked to Felda with MSM Holdings a 71 percent subsidiary of FELDA-related entities while Tradewinds being controlled 43 percent by tycoon Syed Mokhtar al-Bukhary, with another 20 percent owned by FELDA Global Ventures Holdings Sdn Bhd.“The question then is - whether the 170 percent increase in sugar subsidy or approximately RM198 million a year payable to MSM Holdings and Tradewinds, is in fact a thinly disguised attempt to fatten the profits of these two politically-connected companies,” he said.

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