CMS has No State Monopoly on Cement, does Not Control Cement Prices and Promotes Free and Competitive Trade in Sarawak

Kuching (Sarawak), Wednesday, 4 July 2018 – In response to a motion moved by Pujut Assemblyman Ting Tiong Choon, CMS has rigorously stated that it is erroneous to say CMS has a monopoly over the production and sale of cement in Sarawak. Moreover, CMS has not risen the price of cement in Sarawak since January 2016, choosing instead to absorb the rising costs of producing cement itself, without passing the burden to the customer. What’s more, CMS Cement Division has made clear that the Sarawak market remains open and thus competitive in that there are no restrictions on players setting up plants or importing cement so long as they comply with the usual rules and regulations.

Contrary to the assertion made by Assemblyman Ting Tiong Choon that since June 2016, one bag of 50kg cement is sold at RM21.50 in Sarawak, but at RM17.30 in Sabah, the true figure quoted by the Malaysian Department of Statistics is RM20.37 for a 50kg bag of cement in Sabah and RM21.14 for Sarawak – a difference of only RM0.77 and not the difference of RM4.20 stated by the assemblyman. The comparatively modest higher prices in Sarawak over Sabah can be attributed to higher mark-ups by dealers and retailers in view of the higher costs of living in parts of the State (such as Miri) and that prices in Sarawak cannot be expected to be the same due to the size of the State (124,451km² vs 73,904km² for Sabah), which exponentially increases the cost of logistics due to longer delivery distances and double handling.

As CMS has made clear on previous occasions, that there is only one manufacturer in the State with 3 plants reflect the limited size of the market and that it would not make financial sense for another player either to set up a plant or to develop a long term importing business.  This is especially the case in Sarawak where CMS has ensured its cement business efficiently meets all Sarawak’s needs at a fair price.

CMS’s competitive advantage lies in being the first player to set up and thus being able to acquire good port proximities for its 3 plants, as well as the necessary limestone reserves, both of which would be almost impossible to replicate. CMS also attributes its cement division’s strength to being customer-centric and supplier focused providing quality cement reliably and at a fair price.  This has motivated CMS to invest strongly in its quality controls and supply logistics – including in jetties, barges and terminals, and, now, to anticipate future demand growth, in a 1 million MT grinding plant in Mambong, launched in November 2016.

Notwithstanding all the facts, there is no law in place prohibiting or dissuading any other party from setting up a cement manufacturing facility in Sarawak or to import cement into Sarawak including from Sabah and Peninsula Malaysia. CMS has no control on cement price over any part of the supply chain, but due to its size and diversified business portfolio, can decide to absorb the costs of cement production, maintaining the fairest price for the customer.

CMS fully understands that our sole-supplier status gives us a responsibility and a duty to our customers. That is why we have built up our cement business in the way we have, and we will continue to be very responsive always to the needs of our market.