Question

ASSIGNMENT 1: Case Study Topic: Sugar refiners say there is no monopoly in Malaysia KUALA LUMPUR: MSM Malaysia Holdings Bhd (MSM) and Central Sugars Refinery Sdn Bhd (CSR) has reaffirmed that there is no sugar monopoly in Malaysia amid claims by certain parties. The two sole sugar refiners said as sugar is gazetted under the Price Control and Anti-Profiteering Act 2011, sugar price in Malaysia is amongst the cheapest in the world. Currently, the ceiling price for coarse grain sugar (Gula Pasir Kasar) is set at RM2.95 per kg and fine granulated sugar (Gula Pasir Halus) is set at RM3.05 per kg. In Malaysia, the two largest sugar refiners – MSM under FGV Holdings Bhd and CSR under Tradewinds (M) Bhd - operating five sugar refinery plants, with total capacity of two million metric tonnes per year. This is against domestic demand of 1.5 million metric tonnes per year. Apart from local brands, there are importers that bring in and market a variety of sugar brands in Malaysia including SIS. Taikoo. Waitrose, Billington, Tate & Lyle, which provides for a competitive landscape. Meanwhile, industry players such as food and beverage manufacturers buy sugar through the NY#11 (the global commodity trading platform for raw sugar). Local refiners will then execute the buying on behalf of these companies, import the sugar that has been procured and refine it for them for a fee. They said as part of the local refiners' duty to ensure sufficient sugar supply for Malaysia, a certain amount of sugar is stockpiled to ensure adequate supply even during high world raw sugar prices. “Due to the relatively lower world raw sugar prices today, many opportunistic parties that operate without the overheads and responsibilities that local refiners have, are trying to import sugar and profit from the low prices. "These companies may not have the necessary certifications such as the halal certification and will cease operations once the world raw sugar prices go higher than the ceiling price. "It will then be left to local sugar refiners to address the instability by the void left behind by these opportunistic players," they said. MSM and CSR said local refiners operate within a challenging business environment to ensure a steady sugar supply to Malaysian consumers while maintaining a decent sugar stockpile for the nation. "While the costs of doing business has increased, such as minimum wage, gas and electricity tariff, the ceiling price of refined sugar has remained at RM2.95 per kg. "In addition, the industry is adversely affected with illegal activities such as sugar smuggling and infiltration of illicit sugar which are threats to matters conceming halal, quality control and other mandatory certification requirements. "These are ongoing challenges that the sugar industry in Malaysia has to contend with. Nevertheless, the local refiners are committed to provide a stable environment for the consumer whilst maintaining highest standards of sugar quality even at the current controlled price," it said INSTRUCTION 1. Based on article above, list out how many companies are involved in sugar refinery business in Malaysia. Comprehend why the article mentioned that there is no monopoly in the sugar refinery business in Malaysia. 2. Specify other sugar importers in Malaysia and discuss why you think their presence can benefit sugar refinery business in this country, 3. From the viewpoint of business management, elaborate two (2) types of challenges that the sugar businesses might en- counter in terms of overhead cost (workers' wage, utilities cost and others) and how do you think the business operators can do to solve the problems. 4. Assume yourself as an Operation Manager for sugar refinery plant in Shah Alam, Selangor. Based on your judgement, develop one (1) business Strategy to combat sugar smugglers that will affect your business profitability.

Answer 1

1. According to the article,there are two main sugar refinery companies in malaysia.

They say that there is no monopoly in the sugar reginery business because the sugar prices are one of the cheapest in malaysia as it comes under price control and anti profiteering act 2011 and hence do not act like monopoly because the prices are very low. The prices are also loww due to higher domestic suppply as opposed to demand and also the importing companies that create a very competitive environment.

2. Sugar inporters in malaysia include SIS, Taikoo, Tate&Lyle, waitrose, billington. The presence of importers in the country would increase the competitiveness in the country leading to improved quality without too much increase in prices.

3. Sugar industry is seasonal in nature. The challenges could be faced in terms of getting labour in this cycle and there could be labour shortages which might lead to higher wages and hence higher cost for companies. Also, inefficient and old technology use is another challenge in terms of running business. The problems can be solved by investment in new technology and lesser dependence on labour.

4. In order to combat smuggling, businesses should repackage their products under a legitimate brand name which cannot be copied or misused. There should be strict regulations against smugglers and constant quality checks of the same to combat smuggling..