Malaysia feels impact of gas output disruption
> Country has not fully benefited from rising energy prices in past six months because of breakdown at Kebabangan field in Sabah
PETALING JAYA: Malaysia’s gas exports have been suffering from severe disruption since the second quarter of 2018 following a production breakdown at the Kebabangan gas field in Sabah, according to Finance Minister Lim Guan Eng.
Hence, he said, the country has not fully benefited from the rising oil prices in the past six months.
“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,” Lim said in a statement.
He highlighted that the supply disruption has severely affected gross domestic product (GDP) growth and petroleum income tax revenue received by the government. For the third quarter of 2018, petroleum income tax revenue declined 27% to RM2.79 billion from RM3.81 billion in the second quarter.
“The disruption could easily be seen in the industrial production index where the overall index on average grew 2.2% yearon-year (y-o-y) in the May-September period while the mining sub-index contracted by 5.3% y-o-y on average. The same supply shock is expected to continue until the middle of next year,” he added.
Given the less-than-expected revenue received by the federal government from rising energy prices so far, Lim said the continued economic resilience proves that Malaysia is not as dependent on energy prices as in the past. “That economic resilience originates from a mature domestic financial market coupled with political stability provided by a new transparent government,” he noted.
Furthermore, he said, Malaysia has a well-diversified economy with 23% of its GDP contributed by manufacturing and 55% by services, while mining-related activities contribute only 9%.
“Malaysia cannot be compared with Saudi Arabia, where mining forms 25% of the Saudi Arabian economy. It is inappropriate to compare the two countries side-by-side given the stark difference between the two economies,” he added.