Malaysia: Palm oil producers want the price control on cooking oil to be abolished

Malaysian Estate Owners’ Association president Boon Weng Siew said the price control mechanism under the Cooking Oil Subsidy Scheme (COSS) was causing the industry to suffer.

Responding to Domestic Trade and Consumer Affairs Minister Datuk Shahrir Abdul Samad’s suggestion to review price control and subsidies, Boon said artificial price controls led to shortages in the market.

Cooking oil is capped at RM2.50 per kg, half the global market price.

“Price control leads to smuggling and artificial shortage such as the one in January,” he said.
Under COSS, a monthly cess is imposed on palm oil producers with plantations of more than 40 hectares based on the average price of crude palm oil (CPO).

The cess is levied when the CPO price is above RM1,500 per tonne. For every RM100 increase in price, industry players must pay RM2 in cess.

“The current CPO price is RM3,500 per tonne. We’re paying about RM40 per tonne in cess every month, on top of other taxes,” Boon said.

The cess collected is used by the government to subsidise palm oil manufacturers.

“The COSS will end in June and we hope that the government will do away with it and float the price in tandem with the global market.”

He said a competitive price would yield higher income, which meant increased corporate taxes.

“Maybe the government could use the extra income from the tax to subsidise the poor and needy.

“If the subsidy is abolished, the RM3 hike in cooking oil to RM5.50 per kg has minimum effect on inflation.

“The additional burden on a household of five will only be RM2 per capita monthly.

“The increased price will also promote a healthier lifestyle among Malaysians as they are discouraged from excessive consumption of oil,” Boon said.

Meanwhile, Consumers Association of Subang and Shah Alam president and legal adviser Jacob George said he agreed with Shahrir’s move to subsidise consumers rather than producers.

“Consumers and farmers should be given a fair subsidy, but the government has to find new ways to eradicate the role of third parties,” he said.

Kuala Lumpur Consumers Association secretary-general R. Rupa Saminathan, however, disagreed.

“With a higher subsidy, farmers will be able to increase production, thus meeting market demands at all times.”

Federation of Livestock Farmers Associations of Malaysia broiler unit deputy chairman Yap Kim Wah said Shahrir’s plan to remove certain items from the controlled list was a good idea.

“With a more sensible list, producers and farmers will cater to the demand, which profits farmers and consumers.”

Federation of Malaysian Consumer Associations secretary-general Sha’ani Abdullah agreed with Shahrir’s thrust to educate consumers on buying quality and not brand.

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