The government has today imposed fixed prices on fine sugar after manufacturers caused a shortage in coarse sugar, a normal household item, by making more of the lucrative fine-grained product.

Coarse sugar sells at a fixed price in Malaysia and this had pushed refineries to produce more fine sugar, Domestic Trade Minister Shafie Apdal said, adding the decision was made to address the resulting coarse sugar shortage.

"The government hopes the move will help solve the coarse sugar shortage in the retail market lately," Shafie, announcing the change, was quoted as saying late yesterday by the state Bernama news agency.

The drastic action came after manufacturers ignored calls from the government to increase production of coarse sugar to meet demand.

The freeze in prices now sees fine sugar retailing at RM1.55 per kilogramme in peninsular Malaysia, and RM1.65 in Sabah and Sarawak.

The fixed prices have also been extended to manufacturers, industries and wholesalers, Bernama said.

Fine sugar had been selling for RM1.90-RM2.50 before the change.

Stern action against law-breakers

Shafie said action would be taken against retailers breaching the fixed prices, with a penalty of RM15,000 or two years' jail or both, and a RM25,000 fine for the corporate retailers.

"Stern action will be taken if they break the law," said Shafie.

The minister also said manufacturers had been asked to cut back on sugar exports to meet an expected rise in local demand in coming months as the country celebrates a series of festivals.

Malaysia has been struggling with sugar shortages in recent months due to a combination of manufacturing deficits and cross-border smuggling activities because of the commodity's relatively low price in the country.

The government has also accused retailers and wholesalers of hoarding sugar to profiteer from the shortage while consumers have reportedly embarked on panic-buying, exacerbating the situation.

Special report: A sweet problem