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Friday, March 14, 2008

Review factory prices, govt urged

Manufacturers say if nothing done to keep prices down, cost will ultimately be passed to consumers

The government has been urged to review the factory prices of raw materials like flour, palm oil and diesel said to be marked up 40 per cent higher than the market prices.

Small and medium manufacturers here are struggling to sustain businesses given the higher prices of raw materials, among which, flour, palm oil and diesel prices have skyrocketed.

“SMA is hoping that the government will even out factory and market prices for the main raw materials, and it (SMA) will do better if the factory prices can be brought down lower than the market prices,” he told a news conference at the SMA’s premises at Rock Road here.

Chiou pointed out that prices of products like biscuits, bread, cake, titbits and instant noodles would certainly go up if manufacturers here could not sustain the soaring operating costs due to what he termed as “abnormal inflation”.

As to how long the manufacturers could sustain keeping prices down, he said he could foresee that prices of many other goods would have to go up “very soon and it all depends on individual manufacturers”.

Chiou pointed out that a 25kg-pack flour now costs RM52.70 whereas only last month the same pack sold for RM37.55.

“That’s 40 per cent hike against the previous price. When compared to the market price of RM35 per pack, it shows a difference of about 50 per cent,” he pointed out.

According to him, manufacturers are spending RM4.20 for every kg of palm oil while the market price is 40 per cent lower, at RM2.90. At the beginning of last year the factory price of palm oil was RM2.20 per kg, which increased by RM1 at the end of that year.

“For diesel, the market price is 52 per cent lower than the factory price which is offered at RM2.40 per litre. It is hoped that the government will subsidise so that manufacturers can reduce their burden,” he said.

Chiou said the association would prepare a memorandum to be presented to the Ministry of International Trade and Industry (MITI) during a dialogue session slated for end of April.
He, however, did not reveal any details about the dialogue session.

To date, SMA has about 210 members state-wide, of whom more than 30 per cent are involved in the food industries. Also present at the press conference were SMA executive secretary Yeo Eng Hock, council member for food industry Chai Koh How and council member Sim Cho Phong.

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