PUTRAJAYA: Malaysia’s economy is well-diversified, with its manufacturing sector contributing 23 per cent to gross domestic product (GDP); the service sector making up 55 per cent; and mining-related activities forming just nine per cent.
“Malaysia cannot be compared with Saudi Arabia (for example), where mining forms 25 per cent of (the) economy.
“It is inappropriate to compare the two countries… given the stark differences between (them),” Finance Minister Lim Guan Eng said in a statement today.
As for rising energy prices over the last six months, he said Malaysia has not fully benefitted as a gas-exporting country due to a production breakdown in the Kebabangan, Sabah gas field in the second quarter of 2018, which has resulted in a severe supply disruption.
“Major repairs and assessment works are still ongoing and production is only expected to return to full capacity by the middle of next year, at the latest.
“The supply disruption has severely affected GDP growth and petroleum income tax revenue received by the government.
“The disruption could easily be seen in the Industrial Production Index, where the overall index on average grew 2.2 per cent year-on-year (YoY) in the May-September period, while the mining sub-index contracted by 5.3 per cent YoY on average.
“The same supply shock is expected to continue until the middle of next year,” he added.
Given the limited benefits and the lower-than-expected revenue received from energy exports by the federal government despite rising prices, Lim said Malaysia’s continued economic resilience proves that it is not as dependent on energy prices as in the past.
“That economic resilience (is the result of) a mature domestic financial market, coupled with political stability provided by a new transparent government,” Lim added.