KUALA LUMPUR (Nov 16): Malaysia is not as dependent on energy prices as in the past, Finance Minister Lim Guan Eng said, pointing to the 27% decline in revenue from petroleum income tax in the third quarter of 2018 (3Q18) compared with the preceding quarter.
In 3Q18, the government collected RM2.789 billion in petroleum tax revenue, down from RM3.809 billion in 2Q18 and RM3.439 billion in 1Q18.
"Given the limited benefits and the less-than-expected revenue received by the federal government from rising energy prices so far, the continued economic resilience proves that Malaysia is not as dependent on energy prices as in the past," Guan Eng said in a statement today.
Table: Quarterly change in petroleum income tax revenue
| Quarter | Average Brent crude oil price, USD (QoQ change) | Petroleum income tax revenue, MYR million (QoQ change) | Crude oil & condensates production, million barrels (QoQ change) | Natural gas production, mmscf (QoQ change) |
| Q1 2018 |
66 | 3,439 | 60.3 | 617,269 |
| Q2 2018 |
76 (15%) | 3,809 (11%) | 58.8 (-2%) | 553,264 (-10%) |
| Q3 2018 |
75 (-1%) | 2,789 (-27%) | 57.6 (-2%) | 537,151 (-3%) |
Source: Ministry of Finance
"That economic resilience originates from a mature domestic financial market coupled with political stability provided by a new transparent government," he added.
He pointed to the country's well-diversified economy, with 23% of its gross domestic product (GDP) contributed by the manufacturing sector and 55% by the service sector, while mining-related activities formed only 9% of the GDP.
As such, Guan Eng said Malaysia cannot be compared with Saudi Arabia, where mining forms a quarter of the Saudi Arabian economy. "It is inappropriate to compare the two countries side-by-side given the stark difference between the two economies."
The finance minister also noted that Malaysia has not fully benefited from rising energy prices in the past six months after Malaysian gas exports suffered from severe disruption since 2Q18 following a production breakdown in Kebabangan gas field in Sabah.
"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," he added.
Guan Eng noted that the supply disruption has severely affected the country's 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% year-on-year (y-o-y) in the May-September period, while the mining sub-index contracted by 5.3% y-o-y on average," he said.