Cases For Publication (UCWC103)
Abstract

EFFECTS OF GOVERNMENT SUBSIDY: A CASE OF SUGAR IN MALAYSIA

Syed Omar Syed Agil and Sum Kum Mooi

This case highlights the shortage of sugar supply especially when the demand for sugar sky rockets before the festive season. Irrational actions such as panic buying by consumers and opportunistic traders hoarding supply adds to the problem. Being an essential and controlled item, the subsidized price of sugar in the domestic market has to be paid for by the government. At the same time, the wide disparity between the domestic price and the price in neighboring markets has resulted in the smuggling of sugar. The removal of the subsidy on sugar has long been mooted to address these issues, but the fear is that such an action may affect the prices of other food items in which sugar is the main component, as well as the business of hawkers and small and medium-scale enterprises. Many strongly feel that it is high time that the sugar subsidy be removed and be sold at market price due to the country's current excessive intake of 'cheap' sugar.