By Malaysiakini
Selena Ling
Although there is rising concern over Petronas’ plan to slash as much as RM50 billion in capital and operating expenditure over the next four years, an economist believes there would no major impact on the unemployment rate.
“The unemployment rate in Malaysia still fairly low,” said Selena Ling, chief economist and head of treasury research and strategy, OCBC Bank.
“What we see across Asia, the oil and gas sector and manufacturing only take a smaller role in (employment), while domestic consumption and services take a support role,” she said.
“So there has been an absorption of labour from the traditional manufacturing, oil and gas sectors. Of course the transition process may be a little bumpy as the workers were trained.
“But so far, we do not see a big spike in unemployment like what we saw in the Asian Financial Crisis and Global Financial Crisis,” she told a press conference on OCBC Bank’s 2016 economic outlook.
On Tuesday, Malaysiakini reported that Petronas is planning to slash as much as RM50 billion in capital and operating expenses over the next four years.
Petronas – which brings in nearly half of Malaysia’s oil revenue – will defer some of its projects, stated an internal memo by chief executive officer Wan Zulkiflee Wan Ariffin.
The firm has been hit by a slump in oil prices, which fell to their lowest since 2003 on Monday.
Prices have fallen by more than 70% in the past 18 months as exporters around the world pump out over a million barrels of crude every day in excess of demand.
In February last year, Petronas said it planned to cut capital expenditure by 10% and operating expenses up to 30% in 2015.
Petronas also said at the time, that it would cut 2016 capital spending by 15%.
Ling, however, estimates that the world crude oil price may see a rebound in the second half of the year, as industry players adjust their production to stabilise the price.
The current US$26 crude oil price is not possible for them to survive, she noted.
Meanwhile, OCBC global treasury head Ng Seow Pang said the bank would not make an upfront decision to freeze oil and gas industry workers from getting a loan, unlike Bank Simpanan Nasional’s (BSN) announcement on the matter.
BSN has said yesterday that it is considering a proposal to tighten lending rules for loans to employees in the oil and gas sector.
“There is no outright ‘yes’ or ‘no’ answer to the questions, this is dependant on whether the person qualifies for facilities,” Ng told the press conference.
“If anybody comes in to look for a loan, it has to be on a case-by-case basis. There is no decision made upfront on whether a particular industry qualifies for a loan or not,” he stressed.
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