Q and A: Dato Sri Alexander Nanta Linggi on inflation and cooking oil subsidies

Dato Sri Alexander Nanta Linggi


THE WORLD is facing a bleak outlook of simultaneous global inflation and recession in the year 2023.

According to a BBC report, the International Monetary Fund expects inflation to reach 6.6 per cent in advanced economies and 9.5 per cent in emerging markets and developing economies.

BBC also reported  that in September 2022, the United Kingdom experienced inflation of 10.1 per cent while the United States of America experienced 8.2 per cent inflation in the 12 months to September 2022.

Malaysia, a developing country and trading nation is expected to be swept into the same fate but foreseeing the worst to come, the Malaysian government has tried to cushion its impact by continuing existing subsidies and other subsidy programmes including Price Standardisation programme and Community Drumming Programme which benefit rural communities.

Caretaker Domestic Trade and Consumer Affairs Minister Dato Sri Alexander Nanta Linggi explains more.

Q: It is said that next year 2023 will be even worse due to high inflation and recession at the same time. What is your advice for the public?

A: That is the forecast made by IMF (International Monetary Fund), the World Bank and many economists and it will not only affect Malaysia but all parts of the world.

Be prudent and plan your spending well. Spend only on your needs, not wants. That will reduce demand and hopefully will lead to stabilizing the price of goods.

Exercise your right to choose what you want to buy, where you want to buy, and when you want to buy. These will ensure you get the utmost value for your money.

Give preference to Malaysian made goods and this will reduce the demand for imported goods and imported raw materials, and at the same time will reduce the outflow of our currency.

If you have land, please put effort to grow your own food no matter how little it is. Hydrophonic and fertigation technologies are two alternatives and have been proven to be effective in many cases.

Rows of rock melon plants seen at the KidSS (Kidurong Secondary School) mini garden. – file pic

Q: Will 1kg bags of cooking oil continue to be subsidised by the federal government in 2023?

A: These is no plan to discontinue the Cooking Oil Stabilisation Scheme (COSS) under which the 1kg cooking oil is subsidised.

A similar amount of budget funds as of last year has been allocated for 2023. However, it has not been passed due to the dissolution of Parliament.

Through the COSS programme, every year the government will allocate 60,000 metric tonnes of pure cooking oil (minyak masak tulen) or equivalent to 60 million 1kg packets a month which are sold at a highly subsidised price of RM2.50 per kg.

Q: What are the reasons behind the high price of cooking oil (palm oil)?

A: Cooking oil depends on the price of crude palm oil (CPO) in the world market. Palm oil is a commodity and thus the process is determined by world demand.

The global price of CPO was around RM2,500 to RM3,000 per metric tonne before March 2020 and has increased to above RM5,000 per metric tonne after that. Now CPO is priced at RM4,190 per metric tonne.

With the cost of processing, bottling and marketing, the price of processed pure cooking oil should be sold at RM6.20 per kg when CPO is at RM4,190 metric tonne. From here, you can see how heavy is the subsidy the government has to pay.

Harvested oil palm fruits. — file pic

Q: Are there any indications this situation will end soon as the rise in cooking oil price has greatly impacted eateries and restaurants?

A: The price of CPO has shown a downward trend and that is why government’s maximum price for bottled pure cooking oil has been dropped to RM30.50 for 5kg in November 2022 compared to RM34.70 in August 2022.

Almost all the small-to-medium eateries,bsmall restaurants and road side stalls use subsidised cooking oil in polibags, the same for chicken meat and eggs which are also under the maximum price scheme. Thus, there is no reason for these businesses to increase prices unreasonably, what more exorbitantly.

For bigger eateries, we expect them to use the government-controlled maximum price for bottled cooking oil.

The choice is in consumers’ hands. please check the price before you decide where you dine or buy your food.

Tips from KPDNHEP on how to be a smart consumer.

Q: It has been rumoured that the federal government will withdraw some subsidies. Is that true?

A: No, it is not. That is why I hope this information may be disseminated to the people who should by now know that the government has always been caring and ready to provide all forms of subsidies to lighten the burden of the rakyat.

In fact, there are not many other countries in the world where the governments would go to such an extent and take up so much responsibility to lighten the burden of the people.

Contrary to what many critics have claimed, the federal government has never planned to take back or terminated any form of existing subsidy.

Should there be any misunderstanding on bottled cooking oil, the people first of all, must know that the subsidy for it has always been a temporary one, mainly to help the rakyat get through the difficult time when the CPO price is rocketing high. But when the CPO price declines, the subsidy has to be lifted.

Secondly, the people must also know, when the subsidy on bottled cooking oil is lifted, the government continues with other more crucial and long-term programmes such as Bantuan Sara Hidup.bSo the subsidy at the end of the day, still goes to benefit the people.

It is unfortunate the government’s decision was misunderstood and later exploited by irresponsible parties to discredit the government. — DayakDaily

Dato Sri Alexander Nanta Linggi