Malaysian economy not too dependent on oil prices


The country’s economy has not been predominantly relying on the rising energy prices and the oil and gas sector compared to the previous years.

Finance Minister Lim Guan Eng said the government collected RM2.78 billion of petroleum tax revenue in the third quarter of 2018 (3Q18), a 27% decline from RM3.8 billion in the previous quarter.

“Given the limited benefits and the less than expected revenue received by the federal government from rising energy prices so far, the continued economic resilience proves that Malaysia is not as dependent on energy prices as in the past,” he said in a statement last Friday.

The minister said the disruption of gas supply in Kebabangan, Sabah, has affected the country’s gains in revenue despite the better prices in the energy sector.

“Malaysian gas exports has been suffering from the severe disruption since 2Q18 following the production breakdown in the Kebabangan gas field in Sabah.

“Major repairs and assessment works are still ongoing and production is only expected to return to full capacity by the middle of next year, the latest,” he said.

This has severely impacted the country’s growth of GDP and the petroleum income tax revenue to the government.

“The disruption could easily be seen in the Industrial Production Index where the overall index on average grew 2.2% year-on-year (YoY) in the May-September period, while the mining sub-index contracted by 5.3% YoY on average,” he said.

Lim noted that a similar supply condition is expected to persist during the first half of 2019.

He attributed the economic resilience to the mature domestic financial market as well as the political stability set by the new transparent government.

“Malaysia has a well-diversified economy with 23% of its GDP contributed by the manufacturing sector and 55% by the service sector, while the mining-related activities formed only 9% of the GDP,” he said.

He stressed that it is inappropriate to compare Malaysia with a country with stronger mining contribution such as Saudi Arabia, of which 25% of the Saudi Arabian economy generated from the mining sector.