Time to revise subsidy
for cooking Oil?
Almost
every year, Malaysian experiences the shortage of subsidized cooking oil. This
is an ironic, because Malaysia is one of the world largest crude palm oil (CPO)
producers and the raw material is plentiful the whole year. So where have all
the cooking oil go? Being one of the world largest CPO producers, we should be
able to have enough supply to meet the demands.
Apparently, the supplies aren’t able
to meet the demand because there are huge demands for subsidized cooking oil.
Subsidized cooking oil are usually meant for household use, but research shown
that 30% to 35% of the subsidized cooking oil often goes to the wrong hands –
restaurant operators, hawkers, and small-scale food-based industries. Another
10% of the total domestic subsidized cooking oil quota was smuggled into
neighbor countries, as their cooking oil price is twice ours.
Therefore,
the question raised by many is why isn't the Government considering revising or
gradually reducing the cooking oil subsidy similar to the revision on the
subsidies for sugar and petroleum?
Some believed
it is indeed high time to revise the mechanics of the local cooking oil subsidy
introduced some 20 years ago. By reducing the subsidy, this will certainly
reduce the amount of subsidized cooking oil to fall on the wrong hands. The
non-targeted group should be made to purchase the cooking oil at the average
market price instead of the subsidised price. With the price hike, the
smuggling of cooking oil will be reduced and those non-targeted groups will be
forced to purchase it at non-subsidized price, it would reducing the demand for
subsidized cooking oil. Thus, by increasing the price of the subsidized cooking
oil, there will be lesser demand, bringing the demand back to the market equilibrium
rather than excess demand.
Written By
Lim Zhi XIn
0314713
Reference
http://www.thestar.com.my/story.aspx?file=%2f2012%2f10%2f2%2fbusiness%2f12110226
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