LETTERS: Generally, crude oil prices are seen to be volatile and the commodity is facing an ugly price war right now.
Some analysts are anticipating that the price may drop to as low as US$20 a barrel within this year.
Unfortunately, we have been relying too heavily on this commodity to cope with our ever rising operating expenditure.
Obviously, we have to recalibrate our budget, which was based on a crude oil price of US$62 per barrel so as to reflect the huge revenue shortfall caused by the price drop.
Let’s not forget that revenues from other sources, especially corporate and income taxes, too, would be affected by the economic slowdown caused by the Covid- 19 outbreak.
Unless the world can contain the infection soon, there is a high possibility that the global economy may plunge into a recession this year.
Instead of paying a special dividend of RM30 billion on top of the normal dividend of RM24 billion to the government, Petronas should have kept the special dividend in its reserve.
Currently, the price of crude oil is hovering around US$29 per barrel. As worldwide costs range from US$30 to US$40 per barrel, many oil producers may find it difficult to tide over this difficult time.
It will be tough for Petronas to remain profitable this year.
The new government should learn a lesson from the recent oil market meltdown. It should be far-sighted so as not to rely too much on crude oil revenue to administer the country.
While the Barisan Nasional administration did well to implement the Goods and Services Tax (GST) in 2015, the commencement tax rate should have been lower than six per cent.
Perhaps it should have started out at four per cent and gradually raised the rate to six per cent over the years.
Malaysia has good infrastructure and is also a stable multiracial country.
To develop this nation, the new administration should focus on liberalising the economy and reducing corporate tax rates to attract more foreign direct investments.
*The views expressed in this article are the author’s own and do not necessarily reflect those of the New Straits Times