OVERCAPACITY CONCERNS
MSM, with 58pc market share, sees no need to open up sugar sector
MSM Malaysia Holdings Bhd, which controls 58 per cent of the local sugar market, has expressed concerns over potential overcapacity following rumours that the government may open up the sugar sector.
Currently, Malaysia’s sugar market is considered a duopoly, with MSM competing with Tradewinds (M) Bhd.
“While it is the government’s right to issue more licences in the sugar sector, we seek its support and understanding that there’s enough capacity in the local market now,” said chairman Datuk Azhar Abdul Hamid.
MSM’s sugar refinery in Prai, Penang, is able to process 3,000 tonnes per day while the one in Chuping, Perlis, has a daily capacity of 600 tonnes.
Azhar said MSM’s RM1.1 billion refinery in Tanjung Langsat, Johor, would also start operations next month.
The group’s refined sugar is retailed under the “Gula Prai” brand.
“Although there are two main refiners here, the government, on several occasions, had issued approved permits to food and beverage manufacturers to bring in sugar products,” he said after the company’s shareholders meeting, here, yesterday.
“Raw sugar makes up 88 per cent of our production cost. It is a big challenge to keep check on production cost,” Azhar added.
Also present at the meeting were MSM directors Datuk Zakaria Arshad, Datuk Khairil Anuar Aziz and Datuk Zainal Ismail, acting chief executive officer Mohd Shaffie Said and chief financial officer Raja Faridah Raja Ahmad.
Last year, MSM’s posted a RM32.57 million loss on the back of RM2.66 billion revenue.
Azhar acknowledged 2017 was not a good year.
On the outlook for this year, he said: “We have not been sitting still. We must deliver value to shareholders. We’re actively looking to expand sugar exports to emerging markets in Africa and China.”
To a query if MSM might strike up partnerships with overseas players, Azhar said: “There are many ways to skin a cat. We are in preliminary talks with external parties.”
On queries if MSM was being put up for sale, he said parent Felda Global Ventures Holdings Bhd had no plans to let go or dilute its shareholding in MSM Malaysia.
“I would like to assure investors that MSM Malaysia’s business will remain as it is for the foreseeable future.”