Required Report - public distribution

**Date:** 4/14/2005

**GAIN Report Number:** MY5008

MY5008

**Malaysia**

**Sugar**

**Annual**

**2005**

**Approved by:**

![](media/image1.wmf)Jonathan Gressel

U.S. Embassy, Kuala Lumpur

**Prepared by:**

Raymond Hoh

**Report Highlights:**

Total Malaysia cane production is expected to drop to 784 TMT in 2005
due to the adverse dry weather conditions. Domestic sugar consumption
should revert to the normal growth rate of 4 % in 2005 after a very
strong rebound in 2004. The outlook for imports is bright with an
expected 2.4 % growth in 2005. Exports of refined sugar to neighboring
countries are forecast to increase to 400 TMT in 2005.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Kuala Lumpur \[MY1\]

\[MY\]

Table of Contents

[Executive Summary 3](#executive-summary)

[PSD Table: Sugar Cane for Centrifugal
4](#psd-table-sugar-cane-for-centrifugal)

[PSD Table: Centrifugal Sugar 5](#psd-table-centrifugal-sugar)

[Imports Trade Matrix: Centrifugal Sugar
6](#imports-trade-matrix-centrifugal-sugar)

[Export Trade Matrix: Centrifugal Sugar
7](#export-trade-matrix-centrifugal-sugar)

# Executive Summary

Planted area has stabilized to about 16,000 hectares in Malaysia. Cane
output is expected to decline by 2 percent in 2005 due to the adverse
dry weather condition during the December 04 -- March 05 period. Despite
a slight improvement in sugar recovery, raw sugar output is expected to
decrease to 780,000 MT in 2005. Barring any adverse weather, Post
expects cane output to bound back to about 800,000 MT in 2006.

Domestic sugar consumption recovered sharply from the decline
experienced in 2003 when the country was impacted negatively by the
Severe Acute Respiratory Syndrome (SARS) outbreak. Tourism has been back
on its feet and hotels are enjoying high occupancies since 2004.
Conventions and seminars are also on the up-trend again. All these
developments augur well for sugar consumption in the country. Post
expects domestic consumption to grow at the normal rate of 4% in 2005
and 2006. Retail prices for sugar are controlled and remain unchanged at
RM1.40(US\$0.37)/kg since March, 2002. The sugar industry has requested
the GOM to increase the retail price in view of the uptrend in
international prices.

Malaysia is only about 5 percent self-sufficient in domestic sugar
production. Malaysia's raw sugar imports from Thailand recorded a 34%
growth while Brazil's imports plummeted by 27% in 2004. Imports from
Australia dropped 4% but still dominated 44 percent of the market. Post
expects sugar imports to grow at a slower pace as sugar refiners work
down on stocks during 2005. In view of lower exports from Thailand,
Malaysia would turn to other sources such as Australia, South Africa and
South America in 2005. Another strong growth in sugar imports is
expected in 2006 as tourism is forecast to grow and the food-processing
sector is set for further expansion.

Exports of refined sugar dropped 11 percent in 2004. Declines in exports
to Indonesia and the Philippines more than offset an increase in
shipments to Singapore and Taiwan. Post expects Malaysian total sugar
exports to be in the ballpark of 400-420 TMT for the next two years.

Domestic Market Controls

The GOM does not issue production quotas. Through guaranteed support
prices, the three integrated mills are assured of comfortable returns.

Import Controls

Imports are controlled by import licenses. The GOM also ensures that a
fair amount of raw sugar imports is allocated to each of the 3
integrated and 2 non-integrated mills. All raw and refined sugar are not
subject to import tariff.

Export Support

The GOM controls exports through licensing. On rare occasions, the GOM
had stopped issuing export licenses in order to ensure adequate supply
within the country.

Non-transparent Support

The GOM does not give financial aid or indirect long-term support. Two
companies folded 20 years ago and the GOM generally discourages new
sugar venture(s) in the country.

Exchange Rate: Pegged at RM3.799 to US\$1.00 since 1998.

# PSD Table: Sugar Cane for Centrifugal

  ---------------- --------------- ---------- ---------- ---------- ---------- ----------
  **PSD Table**                                                                

  **Country**      **Malaysia**                                                

  **Commodity**    **Sugar Cane                                     (1000      
                   for                                              HA)(1000   
                   Centrifugal**                                    MT)        

                   2004            Revised    2005       Estimate   2006       Forecast

                   USDA Official   Post       USDA       Post       USDA       Post
                   \[Old\]         Estimate   Official   Estimate   Official   Estimate
                                   \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  **Market Year                    01/2004               01/2005               01/2006
  Begin**                                                                      

  Area Planted     0               16         0          16         0          16

  Area Harvested   0               12         0          12         0          12

  Production       0               800        0          784        0          800

  TOTAL SUPPLY     0               800        0          784        0          800

  Utilization for  0               800        0          784        0          800
  Sugar                                                                        

  Utilizatn for    0               0          0          0          0          0
  Alcohol                                                                      

  TOTAL            0               800        0          784        0          800
  UTILIZATION                                                                  
  ---------------- --------------- ---------- ---------- ---------- ---------- ----------

# PSD Table: Centrifugal Sugar

  ---------------------- --------------- ---------- ---------- ---------- ---------- ----------
  **PSD Table**                                                                      

  **Country**            **Malaysia**                                                

  **Commodity**          **Sugar,                                         (1000 MT)  
                         Centrifugal**                                               

                         2004            Revised    2005       Estimate   2006       Forecast

                         USDA Official   Post       USDA       Post       USDA       Post
                         \[Old\]         Estimate   Official   Estimate   Official   Estimate
                                         \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  **Market Year Begin**                  01/2003               01/2004               01/2005

  Beginning Stocks       130             130        145        163        150        151

  Beet Sugar Production  0               0          0          0          0          0

  Cane Sugar Production  80              79         80         78         0          80

  TOTAL Sugar Production 80              79         80         78         0          80

  Raw Imports            1500            1484       1595       1520       0          1610

  Refined Imp.(Raw Val)  0               0          0          0          0          0

  TOTAL Imports          1500            1484       1595       1520       0          1610

  TOTAL SUPPLY           1710            1693       1820       1761       150        1841

  Raw Exports            0               0          0          0          0          0

  Refined Exp.(Raw Val)  450             365        500        400        0          420

  TOTAL EXPORTS          450             365        500        400        0          420

  Human Dom. Consumption 1115            1165       1170       1210       0          1260

  Other Disappearance    0               0          0          0          0          0

  Total Disappearance    1115            1165       1170       1210       0          1263

  Ending Stocks          145             163        150        151        0          158

  TOTAL DISTRIBUTION     1710            1693       1820       1761       0          1841
  ---------------------- --------------- ---------- ---------- ---------- ---------- ----------

# Imports Trade Matrix: Centrifugal Sugar

  ---------------------- ----------------- -------------- ---------------
  **Import Trade                                          
  Matrix**                                                

  **Country**            Malaysia                         

  **Commodity**          Sugar,                           
                         Centrifugal                      

  Time Period            Jan-Dec           Units:         TMT

  Imports for:           2003                             **2004**

  U.S.                                     U.S.            

  Others                                   Others         

  Australia              675               Australia      647

  Thailand               452               Thailand       607

  Brazil                 117               Guatemala      88

  Guatemala              84                Brazil         86

  South Africa           45                South Africa   41

  Belize                 32                India          10

  China                  1                 Indonesia      3

                                           China          2

                                                           

                                                           

  Total for Others       1406                             1484

  Others not Listed                                        

  Grand Total            1406                             1484
  ---------------------- ----------------- -------------- ---------------

# Export Trade Matrix: Centrifugal Sugar

  ------------------------ ---------------- --------------- --------------
  **Export Trade Matrix**                                   

  **Country**              Malaysia                         

  **Commodity**            Sugar,                           
                           Centrifugal                      

  Time Period              Jan-Dec          Units:          TMT

  Exports for:             2003                             **2004**

  U.S.                                      U.S.             

  Others                                    Others          

  Indonesia                266              Indonesia       187

  Singapore                105              Singapore       128

  Philippines              17               Philippines     13

  New Zealand              13               New Zealand     12

  Australia                7                Taiwan          11

  Hong Kong                2                Australia       5

  Cambodia                 1                Bangladesh      2

                                            Hong Kong       2

                                            Russian         1

                                            Cambodia        1

  Total for Others         411                              362

  Others not Listed                                         3

  Grand Total              411                              365
  ------------------------ ---------------- --------------- --------------