The price of oil dropped threefold within the first 20 days of this year, alongside a Ringgit that sorely depreciated against the US Dollar. With our dependency on oil money, how bad is the situation?As oil prices continue to drop, we examine the consequences.
We know that Malaysia depends a lot on income from its oil and gas. But exactly how much? Well, a whopping RM73.4bil alone in 2013 was contributed by Petronas, Malaysia’s wholly owned oil and gas company, to federal and state coffers. More specifically, RM27bil came from dividends, RM33.3bil from taxes, RM12bil from cash payments and RM1.1bil from Export Duty, according to the company’s Annual Report.
It amounted to 30% of government expenditure that year.
The average selling price for crude oil between 2011 and 2014 was US$109 per barrel. However, the average price in the first 20 days of 2015 was US$49.66 per barrel. As oil price is unlikely to recover to over US$100 per barrel this year, this will have a profound impact on Malaysia.
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