Zero Subsidies for Sugar and Flour in Malaysia

Topics: Bread, Food, Malaysia Pages: 3 (1114 words) Published: August 20, 2010
Zero Subsidies For Sugar and Flour,the Future of International Business for food industry in Malaysia.

At the end of 2009 , Malaysia government had announced that there would be zero subsidies for sugar and flour.As a result of that, teh tarik, roti canai and roti bakar are set to cost more next year when the government ceases to subsidise general purpose flour , fine and coarse sugar , and standard loaf bread. Domestic Trade and Consumer Affairs Ministry secretary-general Datuk Mohd Zain Mohd Dom said subsidies for these items will be removed by the end of the year, opening them up to market forces . The retail price for flour is RM1.35/kg, coarse sugar RM1.45/kg, fine sugar RM1.55/kg, and bread RM2.10/400g. Without government subsidy, flour would cost RM2/kg, sugar RM2.05/kg, and bread RM2.42/400g.These include costs for production,manufacturing , distribution , wholesale and retailing.

What will International Business Facing in Malaysia 2010
Some of the production , manufacturing , distribution factories will end up with the shutting down of the factories.Some of the factories not able to afford the increase of cost in manufacturing and producting items.When the cost becomes higher , they couldn’t earn enough profit to run their business.The maintenance for machine,wages,and mischeallonous costs are burdening them.Factories such as GARDENIA BAKERIES and HIGH 5 will facing the troubles above.In order to control profits, maybe they will have to remove price control or increase the price.If they choose to increase the price, demand for the bread will reduce.Due to cost increased and lower profits made, multinational companies like BREADSTORY SDN.BHD will have to close some outlets in Malaysia and invest more in other countries like Indonesia, Sydney and Kuwait at the upcoming season. Currently, BREADSTORY SDN.BHD has 21 outlets in Malaysia, 2 in Kuwait, 8 in Indonesia and 2 in Sydney, Australia. The next roaring chapter of BreadStory is...
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