PAC: Oversupply, weak controls enabling subsidised oil misuse
THE Public Accounts Committee (PAC) has sounded the alarm over what it described as massive leakages in the cooking oil subsidy scheme, saying an inflated quota of up to three times the actual demand has fuelled abuse and wasted billions in public funds.
PAC chairman Datuk 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 subsidised oil, combined with a lack of enforcement and a targeted distribution mechanism, has led to widespread misuse of the subsidised 1 kg packet of cooking oil by ineligible parties.
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“The scheme’s current monthly quota of 60,000 metric tonnes per month is excessive when the actual domestic need of Malaysians is estimated to be only around 19,000 to 30,000 metric tonnes 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 statement yesterday.
Mas Ermieyati also said there were serious weaknesses in the management of damaged cooking oil stock.
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 tonne are considered too high compared to actual processing costs, which are much lower, thereby increasing the government’s subsidy burden without reasonable justification for operating costs.
“Worryingly, foreign companies control 67% of the subsidised cooking oil refining quotas, while local government-linked companies like FGV and SD Guthrie only hold 10.6%,” she said.
As such, the PAC has suggested eight changes, including a thorough look at the whole cooking oil supply process and cutting the monthly quota from 60,000 metric tonnes to better match what people actually need to stop waste and save public money.
It also urged the Domestic Trade and Cost of Living Ministry to review the subsidy rate of RM600 per metric tonne provided to packaging companies to ensure that it is more reasonable.
“The ministry should stipulate that subsidy payments to packaging companies are made only for cooking oil stocks that are not damaged, to prevent unnecessary and excessive subsidy payments,” she said, adding that the government should also expedite the transition from a blanket subsidy system to a targeted subsidy mechanism which is fully digital, such as through the eCOSS system.
Ten proceedings were conducted between Aug 5 and Oct 15, 2025.
The PAC had summoned the Domestic Trade and Cost of Living Ministry, the Home Ministry, the Department of Islamic Development Malaysia, the Malayan Edible Oil Manufacturers’ Association, the Palm Oil Refiners Association of Malaysia, the Malaysia Retailers Association, the Federation of Malaysian Consumers Associations, Mydin Mohamed Holdings Bhd, and Felda Global Ventures Holdings Bhd as witnesses.
The parliamentary committee had initiated the probe after the Auditor General’s Report Series 2/2025 report found weaknesses in the management of the cooking oil price control and subsidy programmes.
