KUALA LUMPUR (July 16): The Public Accounts Committee (PAC) has 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.

PAC chairman Datuk Mas Ermieyati Samsudin said the absence 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 benefitting the target group.

She 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.

"This has resulted in subsidised 1kg cooking oil packets being misused by ineligible groups, including foreign nationals and commercial operators," she said in a statement on Thursday.

The COSS, administered by the Ministry of Domestic Trade and Cost of Living (KPDN), caps the retail price of standard 1kg packets of cooking oil at RM2.50 to ensure affordability for Malaysian households.

In its latest report on the Management of Cooking Oil Price Controls and Subsidies, tabled in Parliament on Thursday, the PAC found that the monthly COSS quota is set at 60,000 metric tons, while actual domestic demand is estimated at only between 19,000 and 30,000 metric tons.

The committee also noted that two of the nine cooking oil repacking companies flagged by the auditor general still do not possess halal certification.

It acknowledged that the KPDN had developed the eCOSS system in 2023 to monitor the supply chain of subsidised cooking oil from refineries to retailers, enabling cross-checks of supply volumes throughout the distribution chain.

However, the PAC said serious weaknesses remain in the management of damaged cooking oil stocks due to the absence of a standard operating procedure at the repacker level. As a result, the government continues to subsidise damaged products that never reach consumers.

The committee also found weak enforcement at the retail level, leading to widespread practices such as conditional sales, stockpiling and the sale of subsidised cooking oil above the controlled price of RM2.50 per packet.

It further highlighted an imbalance in the refining sector, with foreign companies controlling 67% of the subsidised cooking oil quota, while government-linked companies such as FGV Holdings Bhd and SD Guthrie Bhd (KL:SDG) account for only 10.6%, with the remainder allocated to other local companies.

The PAC also said the RM600-per-metric-ton subsidy paid to repackers appeared excessive relative to actual processing costs, unnecessarily increasing the government's subsidy burden.

The PAC proposed eight measures, including a review of the cooking oil supply chain and a reduction in the monthly COSS quota to better match domestic demand.

It also urged the KPDN to review the RM600-per-metric-ton subsidy paid to repackers to better align it with current operating costs, and to ensure subsidies are paid only for undamaged cooking oil stocks.

The committee further recommended that the government expedite the transition from a blanket subsidy to a fully digital targeted subsidy system through eCOSS to ensure assistance reaches only eligible Malaysian citizens.

Among its other recommendations, the PAC urged the government to study the feasibility of floating cooking oil prices, taking the liberalisation of chicken and egg prices as a model to improve supply stability, reduce subsidy expenditure and encourage healthier price competition.

The committee also proposed redistributing refining quotas to give greater priority to competitive local companies in order to reduce the dominance of foreign firms.

In addition, it called on the KPDN and the Home Ministry to strengthen coordinated border enforcement through greater use of technologies such as artificial intelligence, drones and CCTV surveillance, while enhancing compliance monitoring across the supply chain and taking firm action against quota holders that breach regulations.

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