KUALA LUMPUR: The government has reduced its dependence on petroleum-related revenue to 29.7% in 2013 compared with 40.3% in 2009 and it expects the declining trend to continue in the years to come.

The Ministry of Finance (MoF),  in a written reply in Parliament on Wednesday, said the government has over the years diversified the country’s economy base and has also reduced its dependence on any industry or commodity.

The ministry’s response was based on questions from Tebrau Member of Parliament Khoo Soo Seang (BN).

“The fall in crude oil prices is not expected to have a short-term nor long-term impact on the country’s economy,” said MoF.

It noted that the financial and banking systems have been strengthened to ensure that the country’s economy can survive uncertainties. 

Moreover, the ministry said that fiscal reforms undertaken to improve the economy include the introduction of the goods and services tax (GST), outcome-based budgeting and accrual accounting, subsidy rationalisation, increased spending efficiency and tighter auditing.

“With the introduction of the GST, the government will be able to streamline and expand its tax base. So, falling crude oil price is not expected to create a sudden impact on the local economy,” it said.

Khoo had also asked about Petroliam Nasional Bhd’s (Petronas) current oil production rate per day.

The ministry said Petronas will be keeping to its current domestic production rate of 500,000 barrels per day (bpd). In 2014, Petronas saw production of 603,000bpd  while it was  576,000bpd in 2013.

Additionally, MoF listed three strategies to safeguard the nation’s economic strength.

Its first strategy is to ensure economic growth that is balanced, inclusive and sustainable through an increase in export activities as well as an increase in consumption and private investments.

Some of these steps include helping small and medium enterprise companies expand their export market. The government will also be prioritising local contractors to take on repair works in places affected from last year’s floods as well as delay a power tariff hike and increase in gas prices for the industrial sector this year.

Its second strategy is to continuously ensure the sustainability of the nation’s fiscal consolidation while the third strategy is the provision of assistance to citizens and businesses which were effected from last year’s floods.

“These measures are expected to ensure that the country is able to achieve a sustainable gross domestic product (GDP) of 4.5% to 5.5% and reduce its deficit to 3.4% of the GDP this year,” said MoF.

This article first appeared in The Edge Financial Daily, on March 20, 2015.