‘RISING OIL PRICES TO BOOST ECONOMY’
Rise will make budget seem conservative, says Rahman
THE all-encapsulating 2018 Budget could be made to look conservative should crude oil prices continue to rise, a sign that the economy is set to recover over the coming three years.
Minister in the Prime Minister’s Department Datuk Seri Abdul Rahman Dahlan said the rise has already been predicted by analysts, and the Organisation of Petroleum Exporting Countries (OPEC) had stated their confidence of a rise to US$70 (RM297) in 2018 from US$55 per barrel currently, which would be a positive sign for the ringgit.
Speaking on the Bicara Bajet 2018 programme, a collaboration between the New Straits Times, Berita Harian and Harian Metro, aired live on NST Online’s Facebook page yesterday, Rahman said the confidence was justified by the drop in supply of crude oil due to a lack of exploration worldwide since 2014.
“When the price dropped, oil and gas companies did not see it as viable to continue exploration and, thus, there were very few new oil fields discovered over the past three years,” said Rahman.
“This meant a declining supply and eventually, the lack of supply would drive the price up.”
He said when crude oil prices crashed from more than US$100 per barrel to less than US$40 in 2014, it resulted in an annual revenue loss of more than RM42 billion for Malaysia, which impacted the economy, as did the ringgit against the US dollar.
“I spoke to officials from OPEC and non-OPEC nations and they are all bullish about this,” said Rahman, adding that he appreciated Prime Minister Datuk Seri Najib Razak’s economic vision in budget planning.
“Najib was unfortunate to have been confronted with the huge drop in oil prices in 2014.”
He said the 2018 Budget, with an allocation of RM20 billion more than that of 2017, was a comprehensive budget that touched upon all facets of society and should be also seen as a mode by which the people gained a part of the nation’s wealth.
“At the same time, there are many forms of aid for the people in the form of income tax revisions and the abolishment of four toll gates, while also managing to reduce our fiscal deficit. The prime minister has been very disciplined in expenditure.”
On the Goods and Services Tax (GST), Rahman said it was irresponsible of the opposition to state that its abolishment would be more beneficial.
“Nobody likes taxes, but many countries have implemented GST. If you look at the bigger picture, oil prices had fallen from US$100 to US$40 in a very short time, which impacted the economy hard. It took more than RM42 billion out of our budget.”