Comments by the Minister of Trade on the Price of Malaysian Cooking Oil Only Rp. 8,500 Per Kg

KOMPAS.com – Minister of Trade of the Republic of Indonesia (Trade Minister) Muhammad Lutfi admits cooking oil price simple packaging of government programs sold in Malaysia much cheaper than in Indonesia.

According to Lutfi, the cheap price of cooking oil in Malaysia is because the neighboring country provides a bigger subsidy than the Indonesian government.

“Indeed, this is common in Malaysia, they provide direct subsidies to the community. They are subsidies, so they give subsidies, the government provides subsidies,” explained Lutfi in his official statement quoted on Tuesday (1/2/2022).

He mentioned that Malaysia provides a subsidy of 60 million liters per month to be sold to the public at a price of 2.5 ringgit per kilogram or equivalent to around Rp 8,500.

Also read: Trade Minister Claims Indonesian Cooking Oil Is Cheaper Than Malaysia, Fact?

He said the price of non-subsidized cooking oil in Malaysia was actually not much different from that in Indonesia. Vegetable oil from palm there is priced at around 6.7 ringgit or around Rp. 20,000 per kilogram.

“This means that it is actually more expensive than oil in Indonesia,” said Lutfi.

In terms of volume and population of Malaysia alone, it is not comparable to Indonesia. This means that the cooking oil price subsidy policy in Malaysia is relatively more successful than the same program in Indonesia.

In the Malaysian market, cooking oil is sold in kilograms, not liters as used by retailers in Indonesia. 1 liter of cooking oil is approximately equivalent to 0.8 kilograms of cooking oil.

In comparison to the prices of basic necessities, another thing to note is that Malaysians’ GDP per capita is also higher than Indonesia’s.

Quoted from the official website of the Ministry of Domestic Trade and Halehwal Users (KPDNHEP), the Malaysian government sets the price of cooking oil, as cooking oil in Malaysia, for simple packaging is RM 2.5 or equivalent to Rp. 8,500 (exchange rate of Rp. 3,400).

Also read: Singapore, a small country that controls a lot of oil palm plantations in Indonesia

That price is the price of cooking oil subsidized by the government with simple plastic packaging in the program Cooking Oil Stabilization Scheme (COSS).

For the price of non-subsidized cooking oil, as of December 31, 2021, KPDNHEP released the price of cooking oil at RM 27.9 or around Rp. 95,100 for a 5 kg size.

In other words, the price of cooking oil in Malaysia is Rp. 19,020 per kilogram. These prices are for some areas such as the State of Pulau Pinang.

According to him, cooking oil sold in bottles and plastic cans is not subsidized and the price is determined by the price of CPO on the world market.

Also read: The Government Sets the Most Expensive Cooking Oil Brand Rp 14,000 Per Liter

Malaysians are free to choose to buy subsidized cooking oil in polybags or non-subsidized packaging in bottles and plastic cans.

“KPDNHEP is discussing with several relevant ministries and institutions to improve the mechanism for applying subsidized and non-subsidized cooking oil prices to reduce the burden on consumers,” he said.

Although the price has increased, the price of cooking oil in Malaysia on the national average is still cheaper than that sold in Indonesia.

In comparing prices of basic necessities between countries, another factor that must be considered is per capita income. This affects purchasing power.

Most recently, Malaysia’s GDP per capita was IDR 149.25 million. while Indonesia has a GDP per capita of IDR 55.52 million.

Also read: Minister of Trade: Cooking Oil DMO Policy Misunderstood by Some Business Actors, Oil Palm Farmers Become Uneasy

(Author: Elsa Chaterina | Editor: Akhdi Martin Pratama)

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