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Growth hit by Sabah gas snag
Published on: Wednesday, November 28, 2018

Kuala Lumpur: Malaysia's gas exports have been suffering from severe disruption since the second quarter of 2018 following a production breakdown at the Kebabangan gas field in Sabah, according to Finance Minister Lim Guan Eng, recently.Hence, he said, the country has not fully benefited from the rising oil prices in the past six months.

"Major repairs and assessment works are still ongoing and production is only expected to return to full capacity by the middle of next year the latest," Lim said in a statement.

He highlighted that the supply disruption has severely affected gross domestic product (GDP) growth and petroleum income tax revenue received by the government.

For the third quarter of 2018, petroleum income tax revenue declined 27pc to RM2.79 billion from RM3.81 billion in the second quarter.

"The disruption could easily be seen in the industrial production index where the overall index on average grew 2.2pc year-on-year (y-o-y) in the May-September period while the mining sub-index contracted by 5.3pc y-o-y on average. The same supply shock is expected to continue until the middle of next year," he added.

Given the less than expected revenue received by the federal government from rising energy prices so far, Lim said the continued economic resilience proves that Malaysia is not as dependent on energy prices as in the past.

"That economic resilience originates from a mature domestic financial market coupled with political stability provided by a new transparent government," he noted.

Furthermore, he said that Malaysia has a well-diversified economy with 23pc of its GDP contributed by the manufacturing sector and 55pc by the services sector, while mining-related activities contributes only 9pc to the GDP.

"Malaysia cannot be compared with Saudi Arabia, where mining forms 25pc of the Saudi Arabian economy. It is inappropriate to compare the two countries side-by-side given the stark difference between the two economies," he added.



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