A Malaysian retail association has warned that stocks of palm oil-based cooking oil in the country will run out in one week unless manufacturers resume normal production.

Several states have reported shortages in recent weeks, with manufacturers and packers reluctant to produce packets of the cooking oil because of soaring crude palm oil prices.

Malaysian Sundry Shops Associations deputy president Gan Choon Hin said unless they started up again, shops would run out of the oil.

"Based on our estimate, the existing stocks in the country will only last for a week," Gan was quoted as saying in New Straits Times .

States are seeing shortages because manufacturers will not produce small packets of oil used by households, since they cannot recoup higher palm oil and transportation costs.

Cooking oil made from palm oil is a controlled item with government-imposed ceiling prices.

Temporary subsidy

In a bid to overcome the shortage, the plantation industries and commodities ministry earlier this week announced a temporary subsidy for cooking oil manufacturers and packers, according to reports.

Under the plan from June to May 2008, palm oil plantations will pay a form of tax totalling some RM661.2 million which will be paid as compensation to cooking oil manufacturers and packers.

The government will also tap an existing industry fund for payouts, according to reports.

"I hope both manufacturers and re-packers will start producing and packing enough cooking oil as the plantation industries and commodities ministry has already promised to subsidise manufacturers," Gan said.

Crude palm oil has risen some 50 percent since October last year to RM2,200 per tonne.