Call for cooking oil subsidy overhaul: KPDN responds with local refinery push, tighter controls

By DayakDaily Team KUCHING, July 18: The Ministry of Domestic Trade and Cost of Living (KPDN) is introducing measures to encourage packaging companies to source subsidised cooking oil from locally owned refineries, as part of broader reforms to strengthen the Cooking Oil Stabilisation Scheme (COSS). In a statement, KPDN Minister Datuk Armizan Mohd Ali said this in response to a call from the Public Accounts Committee (PAC) for an overhaul of the cooking oil subsidy system. “KPDN notes the PAC’s recommendation to study the redistribution of refinery quotas to prioritise competitive locally owned companies and reduce the dominance of foreign-owned firms. “Since the introduction of COSS, refinery quotas have not been determined by the government. Instead, packaging companies decide on their suppliers and refineries based on logistics costs, credit terms, pricing, supply sustainability, and the location of refineries and repacking facilities. “As part of ongoing improvements to COSS, KPDN is gradually implementing intervention measures to encourage repackers to source supplies from locally owned refineries. These include conditions for quota replacement and business matching mechanisms between local refineries and repackers,” he said. He also took note of the committee’s call to expedite the transition from the current bulk subsidy for packaged cooking oil to a targeted subsidy system through eCOSS, saying that the system will be further strengthened using the new Malaysian identity card (IC) to allow consumers to verify their identity using QR codes when purchasing subsidised cooking oil. “This will facilitate targeted sales and prevent foreigners from purchasing subsidised cooking oil,” he said. He went on to say that the ministry had also implemented improvement measures and strategies, which include the following: - Prohibiting the sale of 1kg subsidised packaged cooking oil to non-citizens under the Supply Control (Prohibition on the Sale and Purchase of Controlled Goods) (Cooking Oil) Regulations 2026, effective 1 March 1, 2026. - Introducing a standard operating procedure (SOP) for the management of waste and damaged cooking oil, effective May 1, 2026. - Gazetting the maximum retail price of RM2.50 for 1kg pure palm cooking oil in polybag packaging under the Price Control and Anti-Profiteering Act 2011, effective May 1, 2025. - Integrating the eCOSS system with the SARA (Sumbangan Asas Rahmah) system. - Strengthening monitoring and compliance mechanisms for all quota holders through regular inspections, record audits, subsidy claim verification, and distribution monitoring using the COSS system. - Coordinating enforcement activities through the High-Level Inter-Agency Coordination Committee on Combating Leakages and Smuggling (JTPAP) and the Integrated OPS TIRIS 4.0 Task Force. - Ensuring the availability of 1kg subsidised packaged cooking oil at every Program Jualan Rahmah Madani (PJRM) sales event. - Implementing a zoning mechanism for subsidised cooking oil distribution, whereby packaging companies may determine only 50 per cent of their retail distribution list, while the remaining 50 per cent of wholesalers and retailers are designated by KPDN. “KPDN remains committed to continuously improving COSS by considering findings from internal inspections, the National Audit Department’s Audit Report (July 2025), and the PAC Report. “The ministry hopes the PAC and all stakeholders will continue to support these improvement measures, including firm enforcement against refineries, packaging companies, wholesalers, retailers, and any parties found to have violated the law,” he said. In a report from The Edge Malaysia, the PAC called for an overhaul of Malaysia’s cooking oil subsidy management system after finding that the current mechanism has failed to ensure government subsidies reach their intended beneficiaries. It said the lack of a targeted distribution mechanism had resulted in the government’s RM10.879 billion spending on cooking oil subsidies between 2019 and February 2025 not fully benefiting the target group. Additionally, it said the current Cooking Oil Price Stabilisation Scheme (COSS) also allocates a monthly subsidised cooking oil quota that significantly exceeds actual domestic demand, contributing to leakages and wastage of public funds and resulting in subsidised 1kg cooking oil packets being misused by ineligible groups, including foreign nationals and commercial operators. It also noted that serious weaknesses remain in the management of damaged cooking oil stocks due to the absence of an SOP at the repacker level. As a result, the government continues to subsidise damaged products that never reach consumers. The committee further highlighted an imbalance in the refining sector, with foreign companies controlling 67 per cent of the subsidised cooking oil quota, while government-linked companies (GLCs) account for only 10.6 per cent, with the remainder allocated to other local companies. — DayakDaily