KUALA LUMPUR: The Public Accounts Committee (PAC) has raised concerns over possible wastage of billions of ringgit in cooking oil subsidies due to the government’s subsidised cooking oil quota being far greater than actual domestic demand.
PAC chairman Datuk Wira Mas Ermieyati Samsudin said they found that the government's current Cooking Oil Price Stabilisation Scheme (COSS) quota is up to three times higher than Malaysia's actual domestic demand.
She said this massive overabundance of subsided, combined with a lack of enforcement and a targeted distribution mechanism, has led to widespread misuse of the subsided 1kg packet cooking oil by ineligible parties.
“COSS’s current monthly quote of 60,000 metric tons per month is excessive when the actual domestic need of Malaysians is estimated to be only around 19,000 to 30,000 metric tons per month.
“The absence of targeted distribution mechanisms has also caused the 1kg packet of subsidised cooking oil to be misused by ineligible parties, including foreigners and commercial sector operators,” she said in a press conference at Parliament on Thursday (July 16).
Mas Ermieyati also said there were serious weaknesses in the management of damaged cooking oil stock, as there is no standard operating procedure for handling damaged supplies at packaging companies.
As a result, she said the government continued paying subsidies on damaged cooking oil that would never reach consumers, resulting in unnecessary public expenditure.
She noted that as a result, an estimated RM10.879bil in government subsidy funds did not fully reach the target groups of the subsidy, from 2019 to February 2025.
The lack of enforcement also impacted consumers, with Mas Ermieyati noting that weak monitoring at the retail level had allowed conditional sales, stock hoarding and sales above the controlled price of RM2.50 to become increasingly widespread.
“Profit margins for repackers receiving subsidies of RM600 per metric ton are seen as too high compared to actual processing costs, which are much lower, thereby increasing the government’s subsidy burden without reasonable justification of operating costs.
“Worryingly, the market dominance of subsidised cooking oil at the refining level was also unbalanced, with foreign companies controlling 67% of subsidised cooking oil refining quotas, while local government-linked companies, including FGV and SD Guthrie, accounted for only 10.6%," she said.
To resolve this, Mas Ermieyati said the PAC recommended eight measures, such as reducing the monthly cooking oil quota to better match domestic demand, reviewing subsidy rates and stopping the payment of subsidies for damaged cooking oil.
It also called for the accelerated rollout of targeted digital subsidies through the eCOSS system, stronger enforcement against leakages and smuggling, and a study on floating cooking oil prices to reduce subsidy spending while ensuring adequate market supply.
