Cooking oil: Cabinet agrees to two-tier pricing mechanism

01 Nov 2023 07:40pm
Armizan during Dewan Rakyat sitting in Dewan Rakyat on Wednesday.
Armizan during Dewan Rakyat sitting in Dewan Rakyat on Wednesday.
KUALA LUMPUR - The Cabinet has agreed in principle with the proposed implementation of a two tier pricing mechanism to control the price of cooking oil, said Acting Domestic Trade and Cost of Living Minister (KPDN) Datuk Armizan Mohd Ali.

He said the proposal includes a new approach to setting the prices of crude palm oil (CPO) for domestic and export distribution.

"Further instruction from the Cabinet regarding this proposal is for the relevant ministries to engage in direct discussions with industry players."

"I am confident that the Ministry of Plantation and Commodities will make an announcement soon regarding the two-tier pricing approach for CPO," he said when winding-up debate on the 2024 Supply Bill for the ministry in the Dewan Rakyat today.

Meanwhile, Armizan said KPDN would require a total of RM1.9 billion to implement oil subsidies this year.

He said the original allocation of RM500 million was spent in the first two months of this year while additional funds of RM400 had also been used.

"Last Thursday we received an additional RM350 million to cover this subsidy and the Finance Ministry has given its commitment that additional allocations will continue to be channeled for the subsidy," he said.

Armizan said the increase in allocations required for the purpose of implementing oil subsidies was due to unexpected and excessive increases in CPO prices.

He said in 2019 the government only allocated a total of RM269 million for the subsidy, which increased to RM528.2 million in 2020, RM2.19 billion (2021) and RM2.41 billion last year.
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In the meantime, in response to a question from Suhaizan Kayat (PH-Pulai) as to whether the government had plans to prevent oil subsidy leakage, Armizan said the distribution of oil based on zones is among the recommendations being considered to overcome the issue.

"Currently we distribute according to state, but perhaps it would be easier to monitor through distribution by zones, such as North, Central, South, Sabah, and Sarawak zones."

"However, we will look at the audit report that we expect to receive in the first quarter of next year and use it as a reference to design a new and better mechanism," he said.

Elaborating, Armizan said that from Jan to Sept this year, 169 enforcement actions related to cooking oil were recorded by the KPDN with seizures valued at RM1.85 million in addition to receiving 624 case submissions from various related agencies involving a seizure value RM4.4 million.

He said KPDN also saw the need to strengthen the Malaysia Competition Commission (MyCC) and the Competition Act 2010 (Act 712) to improve enforcement of cartel control related to price fixing, production, market control, and bid-rigging in procurement.

"Since its establishment in 2011, a total of 275 companies were fined by MyCC, with 430 cases still under investigation," he said.

Commenting on the Rahmah Sales programme, Armizan said KPDN would launch the Rahmah discount card tomorrow as an incentive for all cafe and restaurant operators who have been supporting the government's Rahmah initiative.

"With this card, these operators will be able to purchase business essentials at a certain discount rate at six supermarkets that have collaborated with the ministry," he said.- BERNAMA