Pua: Sugar hike due to sweet new deal, not subsidy cut

Putrajaya’s sugar subsidy cut was a move aimed at concealing a deal it signed to import sugar at a price way above market rate in 2012, DAP leader Tony Pua said today.

The Petaling Jaya Utara MP accused the government of lying about its justification behind the subsidy slash, claiming consumers could still buy sugar at a much lower price without the cuts if the deal was not inked.

The subsidy cut has raised sugar price by 34 sen a kilogramme. Presently the price stands at RM2.85 a kilogramme.

“The Barisan Nasional (BN) government had come up with all types of excuses to remove the balance of sugar subsidy of 34 sen, or RM521 million annually.

“But the reality is the rakyat have to ‘enjoy’ sugar at a pricier rate is because the government had signed a deal to import sugar at an exorbitant price,” Pua said in a statement.

He noted that the current world sugar price is US$18.91 (RM59.30) per pound but in 2012, Putrajaya revealed that it had inked a three-year deal to import sugar at US$26 per pound.

“Not only do the government not have to bear any subsidy, but sugar price would become much cheaper (if the deal was not inked),” Pua claimed.

At the current rate of global sugar price, taxpayers will have to pay an extra RM194 million a year due to the deal.

The DAP national publicity chief had in the past criticised the deal following its revelation in Parliament then, saying it would add to the government’s growing subsidy burden while maintaining the “duopoly” of Malaysia’s only two sugar producers, the purportedly well-connected Malaysian Sugar Manufacturing Bhd and Tradewinds Bhd.

Yesterday Opposition Leader Datuk Seri Anwar Ibrahim said sugar companies, including that of tycoon Tan Sri Syed Mokhtar Al-Bukhary, who is seen to have close ties with the ruling BN, are expected to rake in a profit of RM1 billion from Putrajaya’s move to cut sugar subsidy.

The opposition leader claimed the move, introduced by the Najib administration to trim down spending and tackle its fast-growing deficit, would strengthen the monopoly of the country’s two main  players in the sugar industry by shooting their profit up by 100 per cent from before the cuts.

The gross profit of the sugar industry is RM4 billion annually. Normally, the profit before tax of these companies is around 9 per cent. After the entry of Tan Sri Mokhtar into the sector, the profit before tax jumped to 15 per cent.

“With the removal of subsidy, the profit before tax of the companies is expected to skyrocket between 20 to 25 per cent with the estimated returns of RM1 billion,” Anwar said in his speech on the 2014 Budget debate.

Pua said the Najib administration must bear the responsibility for a negligent decision that will hurt the average Malaysian.

“The government can no longer give all these lame excuses to justify the price hike… due to the deal, the people have to bear losses in the millions of ringgit. It must admit its mistake,” he said. - www.themalaymailonline.com

Putrajaya’s sugar subsidy cut was a move aimed at concealing a deal it signed to import sugar at a price way above market rate in 2012, DAP leader Tony Pua said today.
The Petaling Jaya Utara MP accused the government of lying about its justification behind the subsidy slash, claiming consumers could still buy sugar at a much lower price without the cuts if the deal was not inked.
The subsidy cut has raised sugar price by 34 sen a kilogramme. Presently the price stands at RM2.85 a kilogramme.

“The Barisan Nasional (BN) government had come up with all types of excuses to remove the balance of sugar subsidy of 34 sen, or RM521 million annually.
“But the reality is the rakyat have to ‘enjoy’ sugar at a pricier rate is because the government had signed a deal to import sugar at an exorbitant price,” Pua said in a statement.
He noted that the current world sugar price is US$18.91 (RM59.30) per pound but in 2012, Putrajaya revealed that it had inked a three-year deal to import sugar at US$26 per pound.
“Not only do the government not have to bear any subsidy, but sugar price would become much cheaper (if the deal was not inked),” Pua claimed.
At the current rate of global sugar price, taxpayers will have to pay an extra RM194 million a year due to the deal.
The DAP national publicity chief had in the past criticised the deal following its revelation in Parliament then, saying it would add to the government’s growing subsidy burden while maintaining the “duopoly” of Malaysia’s only two sugar producers, the purportedly well-connected Malaysian Sugar Manufacturing Bhd and Tradewinds Bhd.
Yesterday Opposition Leader Datuk Seri Anwar Ibrahim said sugar companies, including that of tycoon Tan Sri Syed Mokhtar Al-Bukhary, who is seen to have close ties with the ruling BN, are expected to rake in a profit of RM1 billion from Putrajaya’s move to cut sugar subsidy.
The opposition leader claimed the move, introduced by the Najib administration to trim down spending and tackle its fast-growing deficit, would strengthen the monopoly of the country’s two main  players in the sugar industry by shooting their profit up by 100 per cent from before the cuts.
The gross profit of the sugar industry is RM4 billion annually. Normally, the profit before tax of these companies is around 9 per cent. After the entry of Tan Sri Mokhtar into the sector, the profit before tax jumped to 15 per cent.
“With the removal of subsidy, the profit before tax of the companies is expected to skyrocket between 20 to 25 per cent with the estimated returns of RM1 billion,” Anwar said in his speech on the 2014 Budget debate.
Pua said the Najib administration must bear the responsibility for a negligent decision that will hurt the average Malaysian.
“The government can no longer give all these lame excuses to justify the price hike… due to the deal, the people have to bear losses in the millions of ringgit. It must admit its mistake,” he said.
- See more at: http://www.themalaymailonline.com/malaysia/article/pua-sugar-hike-due-to-sweet-new-deal-not-subsidy-cut#sthash.9nTir46M.dpuf