Penang: The Federal Land Development Authority (FELDA) is set to initiate talks with the Penang government and the Railway Assets Corporation (RAC) regarding a lease extension for Malaysia Holdings Berhad's (MSM) sugar refinery located in Perai. FELDA's chairman, Datuk Seri Ahmad Shabery Cheek, highlighted the urgency of these discussions as the lease is due to expire in five years, amidst the state government's intentions to redevelop the site.
According to BERNAMA News Agency, the refinery, part of the FGV Group, benefits from its strategic location near the port and railway lines, facilitating efficient transportation and logistics for raw sugar imports. Ahmad Shabery acknowledged the land lease from RAC, which operates under the Ministry of Transport (MoT), and expressed understanding of the state's developmental plans. Nevertheless, he emphasized the significant impact that the closure of the refinery could have on the nation's sugar supply chain.
Ahmad Shabery revealed plans to engage in further discussions with Chief Minister Chow Kon Yeow and the MoT, aiming for a 30-year lease extension. This would provide MSM with the opportunity to devise long-term strategies, including potential relocation of operations in the future. Initial talks with Chow have already occurred, and an official meeting is anticipated to explore the matter thoroughly and arrive at an optimal resolution for the refinery, which occupies seven hectares of RAC-owned land.
The chairman also noted the financial implications of closing the MSM Perai refinery, as it would necessitate either the construction of a new refinery or upgrades to existing facilities in Johor, both of which involve significant costs. Constructing a new facility is estimated to require RM4 billion, while enhancing the Johor refinery's production capacity could exceed RM1 billion.
In response to inquiries about alternative locations for the refinery, Ahmad Shabery indicated that no new sites have been considered, emphasizing the need for any location to meet strict logistical requirements. MSM currently operates only two refineries in Malaysia, with the Perai facility playing a crucial role in fulfilling domestic sugar demands. MSM is responsible for ensuring a monthly supply of 24,000 tonnes and maintaining a buffer stock of 32,000 tonnes of raw and refined sugar to ensure consistent availability in the local market.