By P PREM KUMAR / Pic By ISMAIL CHE RUS 

MSM Malaysia Holdings Bhd is exploring merger and acquisition opportunities to export its products due to greater local competition and squeezing of margins.

MSM chairman Datuk Azhar Abdul Hamid said the company has identified countries in Africa and China as interesting export markets.

Azhar said MSM, which controls about 58% of the domestic refined sugar market, is drafting plans to export its products including how to enter these two markets without “financially burdening MSM” unnecessarily.

“We see a growing demand from the African region, while China is a peculiar market because it used to be self-serving, but has become a net importer of sugar,” he said in Kuala Lumpur yesterday.

MSM is 51%-owned by Felda Global Ventures Holdings Bhd, which in turn is controlled by Federal Land Development Authority (Felda).

Azhar said the export markets will also make full use of MSM’s new production capacity that will come on stream once its new sugar refinery in Tanjung Langsat, Johor, commences operations next month.

He said a key concern for MSM would be its position which “is not financially strong”. Options on the table include a partnership or direct export, he added.

“The challenge now is how do we manage the surplus capacity we have with the completion of the new sugar refinery plant and (how do we add the new) export markets (to our portfolios) profitably,” he said.

MSM’s new sugar refinery in Johor will have an annual production capacity of one million tonnes. MSM invested RM1.1 billion in the refinery and Azhar expects the group to take six years to recoup the investment.

The refinery’s production will gradually reach its maximum capacity of one million metric tonnes in 24 months.

“The Johor plant is huge and there are interested parties that want to take a stake in it. We are talking to these external parties right now.”

As soon as the refinery’s operation stabilises, MSM’s board of directors would announce a new CEO for the company, Azhar said.

He said the sugar refiner is currently in the process of reviewing both internal and external candidates.

MSM had appointed Mohd Shaffie Said as acting CEO effective Jan 22, 2018, following the decision by its then-president and group CEO Datuk Mohamad Amri Sahari to resign without notice.

Azhar said MSM will have to reshape itself and ensure that it remains competitive in the event that the sugar industry is liberalised.

“The natural response is to liberalise yourself…we would have to reshape the company to ensure that whatever we undertake is financially viable and justifiable,” he said.

He said the group has enough capacity to produce sugar for the domestic market and there is no real need for the importation of sugar.

“There are still two main players in Malaysia and the government has allowed importation of sugar. There is competition from the non refiners and we are feeling the pressure,” he said, responding to questions about the potential liberalisation of the industry by the government.

Last week, the government established a six-member special task committee to disband monopolies across all industries in the country.

The committee comprises ministers from the Agriculture and Agro-based Industry Ministry, Health Ministry, Transport Ministry, Finance Ministry, Economic Affairs Ministry and International Trade and Industry Ministry.