08/01/2008 (The Star Online), Kuala Lumpur - The market will be flooded with 70,000 tonnes of cooking oil to resolve the shortage of the essential item.

With this move, the 5kg per customer limitation has been lifted, Domestic Trade and Consumer Affairs Minister Datuk Mohd Shafie Apdal told a press conference after meeting government agencies and the private sector on preparations for the Chinese New Year celebrations.

“We will flood the market first and then review what the demand is really like when the shortage is over,” he said, adding that the supply of cooking oil was expected to return to normal by the end of this week.

The announcement came hours after the Cabinet Committee on the Competitiveness of the Palm Oil Industry met in Putrajaya. Prime Minister Datuk Seri Abdullah Ahmad Badawi chaired the meeting.

Shafie said there was no point for cooking oil manufacturers to produce 70,000 tonnes every month when the actual demand was lower.

The usual demand is between 49,000 and 55,000 tonnes a month.

Meanwhile, a statement from the Prime Minister’s Office, which confirmed Shafie's announcement, said RM800mil was spent to subsidise cooking oil in the country last year.

“The Cabinet Committee meeting decided that subsidised cooking oil will not be allowed to be brought out of the country, whether by Malaysians or foreigners.

“The Government will step up enforcement and take stern action against those caught smuggling or hoarding controlled items,” it said.

Shafie said the increase in production of cooking oil would cost the Government more in subsidies.

He said there were no plans to adjust the price of cooking oil, although there were requests from the manufacturers.

When asked on the reasons for the shortage, he said it was the manufacturing quotas and increased demand.

It is understood that manufacturers had used part of this month’s production quota in last month, which had a higher demand than the usual monthly amount.

Shafie said the ministry found that the demand for unsubsidised oil had gone down at almost the same rate as the increase in demand for subsidised oil.

He said there was a reduction in demand for 17kg packs and an increase in demand for the smaller packs. The decrease and increase were almost at the same rate – 56% and 46% respectively.

“The price of unsubsidised cooking oil is now very high. People will find a way to get the cheaper oil,” he said, adding that the manufacturers should act responsibly.

Only cooking oil in packs of 5kg and below are subsidised. Food manufacturing industries are not entitled to the subsidised oil and are supposed to only purchase bulk packs.

Shafie said there would be stricter enforcement, including tougher checks at border checkpoints and factories, to ensure that subsidised cooking oil is not falling into the wrong hands.

Among those present at the meeting were Shafie, Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui, Second Finance Minister Tan Sri Nor Mohamed Yakcop and Energy, Water and Communications Minister Datuk Seri Dr Lim Keng Yaik.