Kuala Lumpur: MSM Malaysia Holdings Bhd will persist in overseeing the hedging of sugar prices based on market averages, anticipating potential new government mechanisms to replace the temporary incentive for sugar producers, reported The Star.
Group chief executive officer Syed Feizal Syed Mohammad noted that the government currently provides an incentive of RM1 per kilogram to local manufacturers to ensure the continuity of supply and stabilize sugar prices for consumers.
“At RM2.85 per kilogram on the retail shelves, this might be the cheapest retail price in the region and possibly worldwide, with local industry players indirectly or directly subsidizing the consumers,” he said. He highlighted that from January 2022 to October last year, the joint industry players have subsidized nearly RM500 million, which is unsustainable.
“We are grateful to the government for being responsive. We have made progress with the current administration to address this issue,” Syed Feizal told reporters after the group’s annual general meeting. MSM Malaysia has to manage the price according to the New York #11 futures contract for raw cane sugar, a global benchmark for sugar trading. The group frequently buys forward the commodity for both wholesale and industry segments.
“We do market average hedging at best. For the non-consumer side, it is a back-to-back cost pass-through to the industry. However, for the consumer side, we need to manage the increase in costs. Similarly, for exports, which make up about 20 to 25 per cent of our business, it is also a cost pass-through to the customers,” he explained.
Syed Feizal also mentioned that MSM aims to explore upstream integration to secure raw sugar sustainably for long-term operational demands. This initiative underscores the company’s commitment to a stable supply chain and sustainable business practices.
The company is focusing on downstream value-added products such as liquid sugar and premix to capitalize on market demand and boost revenue streams. In 2023, MSM Malaysia successfully exported to top markets including the Philippines, China, Singapore, Indonesia, and Vietnam. Additionally, the group maintained export relationships with South Korea, Hong Kong, New Zealand, Taiwan, and Pakistan.
“MSM plans to expand its market reach beyond South Asia and the Asia Pacific into Africa, to penetrate in global market and diversification,” he added
