PETALING JAYA, Nov 11 (Bernama) -- Suppliers are believed to be trying tocreate an artificial shortage of cooking oil in the market in order to askfor a price increase, Primary Industries Minister Datuk Seri Dr Lim KengYaik said Tuesday.

He said they probably were not supplying cooking oil to certain areas orStates in order to create an artificial shortage, particulary during thefestive season, and using market forces to increase the price.

"This is because of suppliers. Maybe they are using this as a plot...weknow all this ...all of us are experienced," Dr Lim said.

"When prices go up a bit, you start to katok (squeeze) people, but whenthe prices go down, nothing happens," he told reporters after opening theEye Laser Correction (M) Sdn Bhd at Kelana Jaya.

Dr Lim was asked on the warning issued by the Domestic Trade and ConsumerAffairs Minister, Tan Sri Muhyiddin Yassin, yesterday to local cooking oilmanufacturers not to try and threaten the Government into increasing theceiling price for the commodity.

The Malaysian Edible Oil Manufacturers' Association had claimed on Sundaythat there would be a shortage of palm oil-based cooking oil in thedomestic market if the Government did not increase the price.

Its President, James Goh Ju Tong, was reported to have said that theshortage was inevitable as local manufacturers suffered huge losses owingto a sudden surge in crude palm oil (CPO) prices.

Dr Lim said he was informed by Muhyiddin about the supply of cooking oiland that any price increase would only be considered after the Hari RayaAidilfitri and Chinese New Year festive season.

"He (Muhyiddin) met them and they said okay, we will hold the prices untilChinese New Year. Now why are they making noise?," he said.

Dr Lim said he was "quite reluctant" to re-introduce the price mechanismsince it would burden the palm oil producers. On the other hand somepeople might abuse the system again.

The price stabilisation system was implemented in 1998 when palm oilprices shot up suddenly after the Malaysian Ringgit depreciated againstthe US dollar.

Under the system, the Government collected cess for palm oil exports andthe proceeds were used to help local edible oil manufacturers, which meantthat palm oil subsidised cooking oil prices.

Dr Lim explained in 1998 that the monthly consumption of cooking oil wasabout 35,000 tonnes but after three months, it went up to 60,000 tonneswhen the price stabilisation mechanism system was introduced.

"This showed that some people obviously abused it."

Dr Lim also said that when the system was implemented in 1998, the palmoil producers had to fork out RM500 million to subsidise cooking oilwhenever the price reached more than US$1,450 per tonne.

"When they (palm oil producers) faced low prices in 2001, did anybody carefor them when the prices went below RM700 per tonne?" he said.

However, he said, the final decision rested with the Domestic Trade andConsumer Affairs Ministry.

Currently, palm oil-based cooking oil in plastic packets is being sold atRM2.50 per kg and RM3.30 a kg in bottles.

Asked if crude palm oil (CPO) was over-priced now, Dr Lim said "No". CPOprices per tonne were still below the soya bean prices, which was US$2,200per tonne, he said.

-- BERNAMA