Use Cpo Export Duty Collection To Subsidise Cooking Oil

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MP SPEAKS | The extension of the movement control order (MCO) to manage the spread of Covid-19 has resulted in many people losing their income resulting in many descending into abject poverty. 
Their livelihoods became more hard-pressed when the prices of essential items such as cooking oil ballooned. The hike in cooking oil prices will also increase the cost of production of food that uses cooking oil.
One of the topics which have been hotly discussed amongst consumers is - the increase of more than RM10 on the price of 5kg cooking oil compared to two years ago due to the hike in the price of Crude Palm Oil (CPO) to more than RM4,200 since last month.
The Malaysian palm oil industry is the industry that contributes most to the government. Besides collecting taxes at all levels of the industry, the government also imposes RM16 cess for every ton of CPO. 
On top of that, the government also collects export duty when the CPO price exceeds RM2,250 per metric ton and a windfall profit levy when the price exceeds RM2,500 per metric ton.

Estimated RM1b export duty to be collected this year

The CPO price has generally exceeded RM3,450 per metric ton this year. This price level allows the government to impose an 8 percent export duty on CPO exports. 
Based on the data of CPO export quantity and monthly average prices on the website of the Malaysian Palm Oil Board (MPOB), the total export duty of CPO that can be collected by Customs from January to May this year, is about RM564,816,356. 
If the CPO prices continue to remain high, then the government will be able to collect more than RM1 billion CPO in export duty for the whole year. (The figures are based on the data stated in the Customs and MPOB website).




CPO export duty collected from January to May this year
Windfall profit levy also estimated at RM1b
According to a statement by Plantation Industries and Commodities Minister Khairuddin Aman Razali dated May 8, the government is expected to collect RM298 million in windfall profit levy for the first quarter of 2021.

At the same time, MPOB director-general Ahmad Parveez Ghulam Kadir said the windfall profit levy could reach RM1bilion this year. 
The estimates show the government can collect about RM2 billion in taxes from CPO export duty and the windfall profit levy from the palm oil industry, for the year ending 2021.
Locally produced cooking oil should be subsidised
The government has been subsidising cooking oil when the RBD Palm Olein was above RM2,300 per metric ton, but the subsidy is only to produce 1kg poly pack cooking oil but not for 2kg-5kg bottled cooking oil.
The 5kg bottled cooking oil price has gone up RM30-RM32.70 compare to RM20-RM23 per bottle during the mid-year of 2019. This increase in price has raised grouses of consumers as it resulted in clear pressures in households.
According to a BH Online report on June 10, the domestic trade and consumers’ affairs (KPDNHEP) minister said the government has been subsidising 60,000 metric ton of cooking oil in the form of 60 million poly pack per month to Malaysians, and the amount is enough for 32.7 million of people with the average of 1.7kg per person per month.


It is time for KPDNHEP to review the efficiency of the cooking oil subsidies system in the form of a 1kg poly pack as the system has resulted in many leakages during distribution and sales, as the poly pack oil doesn’t reach many Malaysians in the B40 category, but instead it has been used by hawkers and restaurant operators.
It’s also time for the government to formulate a new policy by giving subsidies to cooking oil producers when CPO prices reach RM3,500 per metric ton, so that the government can fix a ceiling price for cooking oil as a tool to control inflation.
Malaysia is the second-largest palm oil-producing country in the world. The palm oil industry has contributed billions of ringgit in taxes to the government. As such, the government should use the taxes collected from this industry to subsidise all locally produced cooking oil, especially when CPO prices are high. - Mkini

TERESA KOK is Seputeh MP.
The views expressed here are those of the author/contributor and do not necessarily represent the views of MMKtT.

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