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Malaysia set to be net oil importer next year

KUALA LUMPUR, May 27 (Bernama) -- Malaysia is likely to become an oil importer as early as next year at the current rate it is consuming petroleum.

According to Minister in the Prime Minister's Department Datuk Seri Idris Jala, Malaysians continue to be among the highest fuel consumers per capita in the world fuel consumption habits pattern which generally has remained relatively unchanged despite increased oil prices in 2008.

Idris said that nearly 70% of the government's liquid petroleum gas (LPG) subsidy goes to commercial concerns and not the intended households. And about 3% of the cooking oil subsidy is also abused.

He said the government plans to phase out the petrol subsidy gradually in line with its move to strategically position the Malaysian economy on a stronger footing to realize the aspirations of Vision 2020, which is to achieve a developed, high-income nation status.

"Subsidies are an inaccurate representation of trade," Idris said when officiating at the Subsidy Lab Open Day here to receive feedback from the public on subsidies.

"In addition, they pose a fiscal burden that emerging economies such as Malaysia should move away from. As such, we desperately need an exit strategy for subsidies, as they are unsustainable," he said.

"In order to save the country, we need to increase our GDP, Malaysians need to be aware we are giving the highest subsidies -- 4.6% of GDP even higher than Indonesia (2.7%) and the Philippines (0.2%)," said Idris, who is also the CEO of the Performance Management and Delivery Unit (Pemandu).

Malaysia is one of the most subsidized nations in the world. Its total subsidy of RM74 billion in 2009 is equivalent to RM12,900 per household.

The areas of subsidies are Social (RM42.8 billion), Fuel (RM23.5 billion), Infrastructure (RM4.6 billion) and Food (RM3.1 billion).

"All savings to reduce these savings are intended to reduce our deficit and debt of 103 billion in five years," Idris said.

Meanwhile, studies by Bank Negara have shown that inflation will rise to 4% in the 2011-2012 period and 3% post-2013.

According to Idris, subsidies only result in market distortion and they drain the government of much needed funds that could be better used for more strategic and pressing development projects for the rakyat.

"The time for subsidy rationalisation is now. We are reviewing the possibility of introducing a floating price mechanism, mitigation measures and assistance needed to put in place," he said.

"We do not want to end up like Greece with a total debt of EUR300 billion. Our deficit rose to record high of RM47 billion last year," Idris said.

"If the government continues at the rate of 12% per annum, Malaysia could go bankrupt in 2019 with total debts amounting to RM1,158 billion," he warned.

MySinchew 2010.05.27

 

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