News has it that the government is studying whether to raise the ceiling price of sugar this year. It was reported that the government will have to decide once the consultation paper facilitated by the Domestic Trade and Consumer Affairs Ministry is tabled in the cabinet.
This caused a stir in the public as the nation is currently experiencing high inflationary pressure, especially in the food sector.
For starters, sugar is a controlled item in Malaysia, under the Control of Supplies Act 1961.
Currently, the ceiling prices for wholesale and retail white sugar are RM2.69 and RM2.85 per kg, respectively. However, the wholesale price has effectively only been raised by one cent per kg since 2011.
Also, since 2013, the federal government no longer provides subsidies for sugar. In fact, the government has imposed the sugar tax on sugar-sweetened beverages tax for RM0.40 per litre from July 2019.
So then, is it time to adjust the sugar ceiling price? This depends on who you ask.
If one asks the country’s largest sugar producer in Malaysia, MSM Malaysia, they had already proposed to the government to adjust the sugar ceiling price last month.
The group chief executive officer indicated cost pressure as the main reason, as this comes from freight shipping, gas energy and foreign exchange movement.
Surely, they are a vested interest group, so it is very easy to understand why they propose such.
If one asks Consumers’ Association of Penang, they would like the government to ensure the proposed price adjustment be reasonable so as to prevent certain parties from profiteering.
They reminded the government to never again provide sugar subsidies, but can consider raising sugar tax, hence encouraging people to reduce sugar intake.
Economist Professor Yeah Kim Leng expressed his concern about further repercussions of inflation after the sugar price hike.
Sugar is an essential food ingredient, widely applied in food and beverages.
According to May statistics by the Statistics Department, food inflation is already a confirmed fact and reality.
Nearly 93% of food prices have been raised compared with May in the previous year, which is an average 5.2% increase. This is also a new high in 11 years.
Yeah called for expanding the sugar tax on other food and beverages types, as this can serve the purpose of good public health and at the same time increase the government revenue.
How would ordinary folk respond? I believe at this moment, no one wants to see the sugar price hike, especially when inflation is so prevalent on many fronts, for fear of another food price hike.
Sugar producers claimed that the ceiling price adjustment should not cause significant household financial burden. On the surface, it may seem so, because it is impossible for one to take in so much sugar per day.
The food sold in the market also has a natural limit for the sugar content, even for the sweeter products such as cakes, pastries and candies. But people on the street are wise enough to predict what reality could become.
Those in the food sector and manufacturers would certainly take advantage of the sugar price hike to increase prices, even if they might not really experience significant pressure from the item.
Domestic Trade and Consumer Affairs Ministry’s price control mechanism and government’s food subsidies (currently only on cooking oil and flour), are very important tools for the government to intervene in the market at the crucial period to help B40 lower income households to weather through hyperinflation and alleviate the resulting economic burden.
Finance Minister Tengku Zafrul Abdul Aziz recently announced that if the price of all goods stayed at today’s level, then he expected the federal government to provide a total amount of RM51 billion subsidy in goods, which would be another historic high.
Even if the government does not provide subsidies for sugar under the current economic climate, that is, if the government ever allows the sugar price to go up, this surely would court widespread public backlash, no matter how reasonable this policy is to the sugar producers.
Personally, I feel that raising sugar prices is not sensible at this juncture. However, I do agree, if necessary, to adjust and expand the sugar tax.
I can already affirm the positive effects brought by the sugar tax on the public health. The tax has effectively pushed the beverage manufacturers, in a rather short span of time, to reformulate the drinks and reduce the sugar content in various pre-packed drinks to the level low enough to avoid sugar tax. Perhaps this would be the more superior policy for the government to consider.
106th article for Agora@TMI column, published on The Malaysian Insight, 27 June 2022
