MSM prepared for liberalisation of sugar industry

KUALA LUMPUR: MSM Malaysia Holdings Bhd is reshaping the company to ensure that it remains competitive should the government decide to liberalise the sugar industry, said its chairman Datuk Wira Azhar Abdul Hamid.
“We need to reshape the company to make sure that whatever we undertake is financially viable as well as justifiable with good returns for our shareholders,” he told reporters at its AGM today.
Commenting on the government’s decision to establish a special task force to disband monopolies across all industries in the country, Azhar said there are two main players in the industry today and the government has also allowed the importation of sugar.
“We’re feeling the pressure because there is competition coming from the non-refiners that are basically bringing product into the domestic market. If you ask us are we happy, of course we are not happy. We are constantly telling the government that there is enough capacity to produce sugar for the domestic market so we don’t really need the importation of sugar into the Malaysian domestic market,” he said.
Azhar said MSM supports the domestic market and would like the government to support MSM in return, to minimise the impact from the importation of sugar as well as in terms of pricing, as production cost is a challenge for MSM.
He said the special task force did not approach MSM directly, but has had interactions with its parent company Felda Global Ventures Holdings Bhd (FGV), whereby FGV provided a briefing on MSM’s performance and future direction.
Azhar said the group is working to carve out a strategic direction, which includes focusing on profitable export markets and is currently studying foreign markets to identify opportunities.
“Either you yourself become a producer in a foreign market and serve that particular market or you serve it from Malaysia. That study is currently ongoing and we have to try to make sure that we pick the best option for MSM,” he said, adding that it is looking at several markets including Africa and China.
In the domestic market, MSM supplies some 900,000MT of sugar to the wholesale retail and industrial markets, controlling about 58% of the market. With its new refinery in Johor, the group is looking to manage its surplus capacity via exports.
“This is where we need to do a lot of studies to make sure we are playing in the right market so that we can effectively move the excess capacity to these markets. But we need to do this profitably,” Azhar added.
He said the group has the option to team up with a strategic partner and is in talks with some external parties, which would enable them to optimise their assets and resources but declined to reveal further details, saying that it has yet to decide on its options moving forward.
The Johor refinery is undergoing tests and will begin operations next month. The refinery has a capacity of one million tonnes and will take 24 months to stabilise.
Meanwhile, MSM is also reviewing internal and external candidates to replace its CEO Datuk Mohamad Amri Sahari @ Khuzairi who resigned in January. Mohd Shaffie Said is currently the acting CEO.