Anwar: Najib left out RM505 million cooking oil subsidy cut

Opposition leader Datuk Seri Anwar Ibrahim has highlighted a RM505 million subsidy cut on cooking oil which he said that Finance Minister Datuk Seri Najib Razak failed to mention in his Budget 2014 speech.

“Why did the Government choose to cut (sugar) subsidies and hide the effects of the impending cooking oil subsidy cut?” asked Anwar in the Dewan Rakyat while opening the budget debate today.

In his speech, Anwar questioned why Najib chose to shy away from announcing the RM505.365 million in reduction of subsidies through the Cooking Oil Stabilisation Scheme; and only mentioned the RM551.25 million government savings from sugar subsidy cuts.

“While the people are still in shock over the price hike of sugar, why did the prime minister in his budget speech shy away from announcing a price increase of cooking oil, an amount almost the same as the sugar cut?”

Anwar also argued that big cooking oil producing companies -- such as Felda, Sime Darby and others-- would still be reaping earnings as these companies owned numerous palm oil estates.

He also cited Indonesia, where its government has decided to allocated subsidies for palm oil (CPO) as well as biofuel.

“Why can’t the Malaysian government choose the same approach and instead burden the people with the prices of cooking oil which is expected to rise?” asked the Permatang Pauh MP.

Anwar said that abolishing the sugar subsidy means an immediate hike in price of 34 cents for sugar, but the sugar industry, which is monopolised by two main companies-- Malaysian Sugar Manufacturing (owned by Felda Global Ventures) and Central Sugar (owned by Tradewinds)-- continue to reap rewards.

“The gross income of the sugar industry is about RM4 billion a year. Normally, profit before taxation of sugar is around 9%,” he explained.

“After entry of Tan Sri Syed Mokhtar Al Bukhary in this sector, profit before tax rose to 15%. With the removal of subsidies, profit before tax of these companies in this sector is expected to increase to 20% to 25% with the collection of almost RM1 billion in profit, because it will strengthen the company's monopoly by these two companies,” he said, urging for the removal of such monopolies and allow other companies to compete in the said industry.

“It is clear that when we look at the subsidy cuts of consumables such as sugar and cooking oil, the ones who lose out and are burdened are the rakyat, and big corporations continue to be protected from losing out.”