By A. Stephanie
Idris Jala
The country is becoming increasingly less dependent on revenue from the oil and gas (O&G) sector, the Economic Transformation Programme (ETP) 2014 annual report revealed today.
In a review of the last year, Performance Management and Delivery Unit (Pemandu) CEO Idris Jala said that concerted efforts to diversify the Malaysian economy throughout the ETP’s 12 national key economic areas (NKEAs) – of which O&G is one – has markedly slashed the sector’s revenue contribution to the government.
He said: “Today, the O&G industry (including upstream and downstream) contributes 16.7% of gross domestic product (GDP). Its contribution to the government’s revenue has been steadily decreasing from 40.3% in 2009 to an estimated 29.7% in 2014.”
“Although Malaysia’s economy started off being focused on mining and agricultural activities, over the years, our economy became more industrialised as a result of efforts to diversify the Malaysian economy. We were able to move towards manufacturing and service-based industries.
“This diversification continues with ETP which focuses on developing competitiveness in the 12 top sectors of the economy so we do not end up putting all our eggs in the commodities basket,” the Pemandu CEO said.
The ETP 2014 annual report was published by Pemandu, a unit under the Prime Minister’s Department.
RM225 billion revenue targeted
With GST at 6%, he said the government will thus be able to capture an estimated RM19.4 billion in revenue by December 2015. “In the long term, we would be able to allocate more resources for infrastructure and people development, and improve our social safety nets,” Jala commented.
He said: “With rising efficiency of tax collection, we have seen government revenue rise in the last five years since 2010. In 2014, we expect to record RM225.1 billion in revenue, compared to RM213.4 billion in 2013,”
Jala said the government has made significant strides in trimming expenditure on subsidies, first removing sugar subsidies in October 2013.
“Last October, the government announced the implementation of the managed float pricing mechanism for RON95 and diesel fuel, reducing government expenditure by RM11 billion for 2015,” he said.
Moreover, he said the government is committed to reducing its fiscal deficit and for the last four years has been steadfast in meeting its target deficit amount, from 6.7% in 2009 to 3.5% in 2014.
Reacting to dropping oil prices, Malaysia’s deficit target for 2015 was revised upwards from 3% to 3.2%, with expectations to be deficit neutral by 2020 still intact.
“With crude oil prices spiralling far below predictions from US$100 per barrel (when Budget 2015 was being planned) to below US$60 per barrel in late November due to a global supply glut, we were one of the first few countries to review our budget to factor in the impact of this volatility.
“Reforms and measures taken to strengthen our economy in the last five years since the launch of the National Transformation Programme have enabled us to be swift and agile in our reactions to ripples from outside,” Jala remarked.
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