Deputy Minister: Cost Of Living Issues Tops List Of KPDNs Initiatives

Various programs and initiatives have been charted as a major shift in the agenda of the Ministry of Domestic Trade and Cost of Living (KPDN) in moving forward under the 12 Malaysia Plan to meet the challenges faced by Malaysians.

Deputy Minister of Domestic Trade and Cost of Living Fuziah Salleh, during KPDN’s Parliamentary winding up session today (Sept 18) said the initiatives include empowering the wholesale and retail industry with digitisation, applying big data and AI technologies in an effort to reduce dependence on foreign labour and reduce operating costs, empowering the MSME sector to participate in adapting digital technology within their operations in efforts to make their businesses more organised and systematic, especially in financial records.

These measures will allow the MSMEs to obtain financial assistance and consultation in the future.

Additionally, Fuziah said the ministry is working on implementing targeted subsidy programs in an organised and prudent manner in reducing negative impacts especially on consumers and the business community, intensifying initiatives to increase people’s income through Micro and Affordable Franchises so that more B40 and M40 see its viability and become involved.

She explained there is a need for organisations to adapt international guidelines and legislation that suits the Malaysian  culture and country to improve the mechanism and structure of consumer protection.

The expansion of the Border Economy program is in line with the Government’s efforts in the Asean Economic Plan as presented by the Prime Minister at the recent Asean Heads of State Meeting while there is a need to also improve the identity and empowerment of consumers so that they are not affected by inflationary pressures and able topurchase goods and services in the face of uncertain price of goods, especially on imported goods.

“RMK12 shows the Government’s commitment to ensure that domestic trade is injected with a breath and a new and progressive approach so that it continues to contribute optimally to the country’s GDP and at the same time the issue of the cost of living and the welfare of the people continues to be the main agenda, said Fuziah.

On the Twelfth Malaysia Plan Half-Term Review (12MPMTR) which is linked with the Ministry of Domestic Trade and Cost of Living (KPDN), Fuziah said the among the ministry’s priorities are to ensure that subsidies given by the Government reaches the target groups, leakage and pressure on the government’s finances have to be minimised.

She said KPDN has been given the responsibility to manage the Cooking Oil Stabilisation Scheme (or COSS – Cooking Oil Stabilisation Scheme) which is a subsidy for cooking oil in 1kg polybags. The COSS program is a subsidy program for household use with a quota of 60,000 metric tons per month, i.e. the distribution of cooking oil is through the existing distribution chain, or  producers, wholesalers, and retailers licensed under the Ministry. However, this packet cooking oil subsidy can also be enjoyed by micro traders who have a low average income.

Through this COSS program, the retail selling price of subsidised cooking oil for 1kg packets is set at RM2.50/kg, much lower than the price of Crude Cooking Oil or CPO determined by the world market. The higher the price of CPO, the higher the subsidy that the Government has to bear. The original allocation of RM400 billion per year for COSS  has now increased to RM2.1 billion for 2022 because CPO prices have soared above RM4,000 per metric ton throughout the year.

Therefore, before this Targeted Cooking Oil Subsidy was implemented, KPDN introduced the eCOSS information and management system, which is a system used to control the distribution of subsidised cooking oil packets. This system has been used on a pilot basis since August 2022 in several states and full implementation across the country has begun on January 1, 2023.

Parallel to that, KPDN is also collecting cooking oil distribution data starting from refineries to packaging companies, wholesalers and up to the retail level. The collection of these data is important to ensure that KPDN has sufficient information regarding the distribution chain of cooking oil and the issues of control of the sale of 1kg subsidized cooking oil, especially at the retail and consumer levels before the Targeted Subsidy is implemented.

The next phase is to limit the sale of subsidized cooking oil packets to specific target groups, using appropriate identification documents at the retail level. Controlling the sale of 1kg packets of cooking oil at the retail level is not an easy matter and we must admit that the retail sector in this country has varying levels of readiness.

KPDN will continue to ensure that the COSS program remains relevant and that the eCOSS system is able to collect the necessary data before the Targeted Subsidy is implemented.

Another policy initiative that is being worked on in synergy with the Targeted Subsidy objective is the Two-tiered Pricing for CPO. Domestic oil consumption is only around less than 10% of the country’s total cooking oil production. Two-tiered pricing will definitely be a game changer in the implementation of Targeted Subsidy and reduce leakage comprehensively.

Implementation details will be formulated together with KPK, MOF and the Ministry of Economy. This effort is an ongoing effort and will be implemented prudently and in phases to ensure its success while minimising the negative impact especially on consumers and the country.

On a related matter, while KPDN is only an enforcer and implements control over the sale, purchase, distribution and ownership of petrol and diesel at all levels, i.e. manufacturers, wholesalers and industrial users based on the official gazette authority of petrol and diesel as Scheduled Controlled Goods under the Supply Control Act 1961.

Accordingly, the granting of petrol and diesel sales subsidies at petrol stations approved by the MOF is in accordance with quotas where KPDN only controls the sale of subsidised petrol and diesel at petrol stations through the enforcement of the conditions of the Scheduled Goods Retail License (CSA).

With that, KPDN only allows the sale of all grades of petrol and diesel fuel to be filled in the vehicle’s original tank only. Purchases other than the vehicle’s original tank needs to apply for permission from the Supply Controller through the approval of a Special Permit.

“Actually commercial contractors are not eligible to use subsidised petrol and diesel.

The purpose of this control is to ensure that the supply of subsidised petrol and diesel at petrol stations is always sufficient for the use of consumer vehicles. In addition, this control is also to avoid bulk purchases for business use that may affect the supply of gasoline and diesel for daily use by consumers.

She added, the country’s inflation rate calculated through the Consumer Price Index (CPI) measures the average change in the price of certain goods and services over a certain period of time.

On 25 August 2023, the Department of Statistics Malaysia (DOSM) reported the latest inflation rate of 2.0 percent for July 2023, lower than the 2.4 percent recorded in June 2023.

In fact, the inflation rate in July 2023 is the lowest rate recorded so far. The inflation rate in July 2023 reflectsa slower rate of increase in the prices of goods and services. This can be seen through the CPI index points in July 2023 which increased to 130.5, compared to 127.9 recorded in July 2022.

Although there are still price increases, the Government’s efforts have succeeded in curbing extreme spikes in the prices. In addition, the implementation of the Rahmah Umbrella initiative is also used to help people who are affected by the pressing issue of the cost of living and the price of goods.

KPDN has implemented 13 Umbrella Rahmah Initiatives to help the extreme poor and the underprivileged to get help with food and basic necessities in an effort to face the challenge of the rising cost of living.

The implementation of 5 main programs under the RAHMAH Umbrella Initiative, namely the RAHMAH Menu, RAHMAH Sales, RAHMAH Packages, RAHMAH Baskets and RAHMAH Student Menus have been proven to be successful in reducing the price of goods and services through a reduction in the inflation rate and the Consumer Price Index (CPI) for the Non-Food and Beverage Group Alcohol.

She cited that from January 2023 until the end of August 2023, the Rahmah Sale has been implemented in 1,940 locations throughout Malaysia including Labuan, Sabah and Sarawak with 3.2 million people benefiting and total sales reaching RM86 million.

On average, over 88 locations were explored for each Parliamentary constituency. This amount includes the performance of the mobile Rahmah Sales which has explored 626 locations with a sales value exceeding RM17 million and the number of people who benefited from it amounting to 532,000 people.

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