PUTRAJAYA: The government is expected to announce a new mechanism for subsidised cooking oil to ensure sufficient supply and stability in price

Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui said a working paper on the proposed mechanism would be discussed during a Cabinet meeting.

He, however, did not go into the details, saying that the working paper was jointly prepared by his ministry and the Domestic Trade and Consumer Affairs Ministry.

"It is not fair for me to tell you more because the paper has not been presented to the Cabinet yet," he told the New Straits Times.

Chin said the mechanism would ensure that consumers, especially low- and medium-income earners, would not be deeply affected by the increase in the overall price of goods.

"It is also a way to protect consumers in the long term," he said.

The proposed mechanism is one of the measures to be introduced by the government to beat inflation. He refused to say if the government would scrap the cooking oil subsidy for which oil palm planters were currently paying.

Chin had recently said that the government was reviewing the Cooking Oil Price Stabilisation Scheme.

One option is to do away with the scheme and to let the federal government shoulder the subsidy as it does for other food items.

The government collected the cess from planters to help reduce losses for cooking oil manufacturers. The price of cooking oil is fixed by the government but this is not enough to cover their costs as crude palm oil (CPO) prices are high.

Planters have been lobbying against the cess as they argue that they are already paying a lot of taxes. In fact, among all the major 17 vegetable oils traded in the global market, palm oil is the most heavily taxed, according to Oilworld, an industry magazine.

Since June 1 last year, the Malaysian Palm Oil Board (MPOB) has been collecting cess of RM2 a tonne of fresh fruit bunches for every RM100 a tonne rise in the CPO price -- as long as it stays above RM1,500 a tonne.

Chin had said that in the 10 months to March 31, 2008, the MPOB collected about RM1.14 billion from oil palm planters owning estates bigger than 40ha. Of that amount, some RM750 million were paid out to refiners and cooking oil manufacturers.