Thursday, October 2, 2014

Quite predictable

What does the below graph tells you...


Our net exports for petroleum is narrowing. At the same time oil prices if dropping to a new low recently in comparison to the last few years. If you have followed our own Malaysian story, we have been rather active on re-opening our marginal oil fields as when oil prices increases, the price of oil would have surpass costs of those older oil fields which were deemed to be too expensive to extract from.

Now that oil prices have started to take a hit, that profit margin is thinning. Malaysia have been largely dependent on oil produces, palm produces as the main revenue for the government. Hence, if oil is to have drop in price, it is actually not so good for us as government's income would be affected as taxes from petroleum could have been lower. That is quite similar for the crude and refined palm where we have scrapped taxes on those produces temporarily.

With that, what does one expect the government to do?

7 comments:

Kevin Wong said...

Investors wanted the Malaysian government to reduce subsidies and implement GST. If not, our bonds & stocks will be dumped and our debt ratings downgraded by rating agencies. Better to tighten our belts now, than to suffer a even worse fate later.

AdCool said...

I just concerns that the tightening is only apply to the normal Malaysian and not the Governments. Just see the budget and the big chunk of revenue allocated to the operation and emolument. Yet I see no improvement in government services and quality.

Kit said...

government has been informed current production only half a million. sorry I can't quote the source of this information

merdeitis said...

It means that the decision to reduce subsidy, although painful personally, is the right one.

Higher fuel price will encourage more usage of public transportation and less wastage.

I would go as far as to say fuel price should be taxed instead of subsidised.

Similar argument against importing cheap labour to Malaysia. It is a false economy and lulls our entreprise into their comfort zone.

lmenwe said...

yea but there are still millions of people can't accept that we will become net importer for o&g in the future.

AdCool said...

When you are governing a country, it can't purely be governed from purely economic perspective. There are social and politic perspective to be factored in. All these need to be balanced up. You gain some, you lose some.

felicity said...

Agreed, but when funds are in shortage, there are some things you got to let go. I guess everyone have to suffer and judging from what the budget is going to be it will probably be the middle class