THE government’s plan to increase subsidies for cooking oil aimed at helping the B40 group is misdirected and is better given in the form of cash aid directly to the poor, sundry shop and hypermarket operators said.

They told The Malaysian Insight of alleged leakages where local hawkers and smugglers from neighbouring countries monopolise supply of subsidised cooking oil, eating into the stock meant for poor households.

“Although the intended purpose of the subsidised oil is for the B40 households, it is known in the market that many restaurants also use the subsidised cooking oil,” said Mydin managing director Ameer Ali Mydin.

“Whenever there is a subsidy for something, there is bound to be leakages in the market,” he told The Malaysian Insight.

“And for cooking oil, normally, the leakages involve either the restaurants or neighbouring countries where the commodity is not subsidised.”

Last month, Prime Minister Muhyiddin Yassin, when announcing the government’s latest RM150 billion aid package, Pemulih, said it will include a price control programme on cooking oil sold in bottles. A 5kg bottle of cooking oil can be placed under price control so as not to exceed RM30.

The Pemulih package is meant to help mitigate the impact of the current lockdown due to the Covid-19 pandemic. The lockdown began nationwide on June 1 and is now extended indefinitely while the enhanced movement-control order (EMCO) has been enforced in many parts of Selangor and Kuala Lumpur from July 1 to 16.

Currently, only the 1kg polybag packets of cooking oil are subsidised.

Ameer said these packets run out fast across his 54 Mydin outlets in the country, mainly because demand exceeds supply.

“The purchasing power of the rakyat now is much lower due to the pandemic. The target market used to be only the B40. Now, even the M20 has become B40,” he said.

“Because of the increase in CPO (crude palm oil) price, cooking oil in bottles is expensive compared with that in polybags.

“And because of the great difference, people go for the oil in polybags.”

To overcome the situation, he suggested subsidies be given to the targeted recipients directly and not via products.

“The only way to get out of this so-called siphoning-off of subsidies by non-intended recipients would be to stop subsidising cooking oil,” said Ameer.

“Let the billions of ringgit be given directly to the needy under different packages.

“If the government is planning to give RM500 as cash aid to the needy, it could increase it because the money is going to the intended recipient.”

Federation of Sundry Goods Merchants Associations of Malaysia president Hong Chee Meng said leakages mostly occur in states that share borders with other countries.

These states are Johor where Singaporeans come to buy goods cheaply, Kelantan where Thai consumers enter via Sungai Golok and Malacca where Indonesians come by boats.

Hong said there are also regular customers from among local hawkers who buy the subsidised cooking oil in cartons – consisting of 24 packets per carton – which sundry shops feel obliged to give in to their requests.

“One carton sold to them would have robbed 24 poor families of the subsidised cooking oil.

“The government will incur losses if it raises the subsidy quota for cooking oil because the current subsidy amount is calculated to meet the needs in Malaysia.

“When there are more subsidies, we are afraid there will be more leakages and it is hard to control,” said Hong, whose association boasts about 5,000 members, comprising mini market operators and wholesalers.

B40 households struggle to get subsidised oil

Nelavathi Marimuthu, a staff member of the corporate social responsibility department of the Taylor’s Education Group, told The Malaysian Insight of how the B40 community struggles to buy subsidised cooking oil.

“Five out of nine people’s housing project (PPR) communities in the Klang Valley have told us that they are struggling to get this item,” said Nelavathi, whose work involves helping micro-entrepreneurs living in PPR flats who sell food to earn an income.

“They say they are often forced to buy bottled cooking oil, which is more costly. If their production costs increase, it will reduce their profit.”

She said most of the micro-entrepreneurs sell food such as nasi lemak and curry puffs, and they do not own shops nor make big profits.

Nor Waheda Abudollah, a resident of PPR Kerinchi, is one of those who are upset about the situation.

She said grocery stores usually limit the number of packets a family can buy to two.

“Getting the subsidised oil is important for us because we cook our meals daily and also use it for business,” she said.

“For home use, the 1kg cooking oil lasts us about three days. And for business, I use 10 packets of 1kg oil daily.”

Jamilah Ab Hamid from PPR Pantai Ria said she buys the 5kg bottle of oil for her business making and selling chilli sauce.

She supports the subsidy for B40 families because the cooking oil would otherwise not be affordable for traders with low incomes.

Zainon Abdullah from PPR Kota Damansara said when the store runs out of subsidised cooking oil, she borrows oil from her neighbours and friends.

“And when I get the subsidised oil, I will return to them what I have borrowed,” she said.

The 54-year-old said she also relied on donated cooking oil from non-profit organisations or the government.

Deputy Minister of Domestic Trade and Consumer Affairs Rosol Wahid recently said the ministry provides a quota of 60,000 tonnes per month or 720,000 tonnes per year of cooking oil in subsidised 1kg packets.

That equates to 60 million 1kg polybags a month, or 1.8kg of palm oil for every Malaysian each month. The selling price is fixed at not more than RM2.50 per kg.

The ministry also said it will conduct a study to set a ceiling price for 5kg bottled cooking oil after cooking oil had seen a price hike due to an increase in CPO price.

Muhyiddin, when announcing the Pemulih aid package, said the price control programme will be introduced for cooking oil products based on the threshold value of CPO amid the rising commodity prices around the world.

With this, he said the price of a 5kg bottle of cooking oil can be controlled to not exceed RM30. – July 15, 2021.