KUALA LUMPUR (July 21): The current policy on subsidised cooking oil is not comprehensive and has allowed non-targeted groups, including non-citizens, to benefit from the government’s subsidy programme, according to the National Audit Department (NAD).

In its second Auditor General’s Report for 2025, the department said the existing framework under the Cooking Oil Price Stabilisation Scheme (COSS) lacked clear eligibility requirements for the purchase of subsidised cooking oil, which is meant for Malaysian households.

“Cooking oil subsidy is categorised as a bulk subsidy given to targeted groups, but ineligible groups including non-citizens also benefit from the subsidy when they purchase these goods. Audit review found that the existing policy does not specify eligibility conditions for the purchase of subsidised cooking oil,” the report stated.

The audit also flagged unauthorised sales of subsidised oil by refiners, wholesalers and retailers to ineligible buyers, which further diminished supplies for household use. 

Beyond non-citizens, these ineligible buyers also include commercial entities such as restaurants, food manufacturers, and retailers who are not supposed to benefit from household-targeted subsidies. 

The NAD said that the absence of clear enforcement provisions and eligibility criteria has enabled these parties to purchase subsidised oil in bulk, undermining the programme’s original intent of easing the cost of living for low- and middle-income Malaysian households.

The department also flagged the Ministry of Domestic Trade and Cost of Living (KPDN) for continuing to rely on a fixed monthly quota of 60,000 metric tonnes (mt), as determined by a 2016 Cabinet decision, without conducting any updated study to justify the volume based on current consumption patterns.

While the ministry’s standard operating procedure (SOP) estimates that the average Malaysian consumes 1.5kg of cooking oil per month, the audit found no empirical research to support this figure. Furthermore, the monthly quota of 60,000mt was found to be inconsistent with both actual demand and the government’s broader efforts to improve subsidy targeting.

Additionally, the report highlighted inconsistencies between the quota-based estimation and the retail purchase cap of three packets per customer, per transaction. It warned that the cap does little to prevent stockpiling or repeated purchases by commercial entities.

“Audit review found no clear justification for the basis of setting 60,000 mt of cooking oil per month for the population of Malaysia. The requirement of 1.5kg of cooking oil per month for each resident is also not supported by a study of actual needs,” the report stated.

“The set projection of ideal cooking oil usage quota of 1.5kg per person per month is not aligned with the three-unit purchase limit per transaction. This may affect the supply of subsidised cooking oil in the market. The three-unit per transaction limit also does not guarantee sufficient market supply if repeated purchases are made by customers,” it added. 

Moreover, the retail price of subsidised cooking oil was found to exceed the RM2.50 per kg controlled ceiling price at various points in the supply chain. The lack of price regulation on upstream costs and margins led some retailers to charge above the set ceiling price, despite receiving subsidies, the NAD said.

To address the gaps, the NAD recommended that the government continue providing cooking-oil subsidies, but with stronger enforcement and more precise targeting.

“KPDN should review and improve the COSS SOP regularly, to address gaps in the current programme implementation, including the management of damaged cooking oil and [the] monitoring of halal certification.

“In addition, KPDN should also establish a targeted distribution policy, so that the subsidy is only received by eligible households, according to the specified criteria and conditions,” it said. 

The department proposed using existing national databases such as eKasih and PADU to identify and verify target recipients, and to limit access by non-citizens or commercial entities. It also called for a review of the current purchase limit to better reflect actual consumption needs.

On enforcement, the NAD urged KPDN to monitor retail prices more aggressively, and collaborate with local authorities to ensure compliance with the RM2.50 ceiling. Violators should face immediate penalties, including fines, licence revocation, and seizure of goods.

The report also mooted an expansion of targeted assistance schemes like Sumbangan Asas Rahmah (SARA), which disburses special vouchers for essential goods, including subsidised cooking oil, to low-income households. A centralised real-time tracking system was recommended to improve transparency and curb misuse of such vouchers.

For more AG's Report 2025 stories, click here.