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Zeti-02DEc2014_theedgemarketsKUALA LUMPUR: The decline seen in global crude oil prices still works in Malaysia’s favour, said Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz (pic).

The current level of oil prices means lower costs for consumers, said Zeti at the Asean Business Club corporate networking lunch yesterday.

“Of course, this means people will have more income for discretionary expenditure and there will be an increased consumption demand, hence spurring growth,” she said.

However, she admitted that if prices were to drop below a certain threshold, it would have a negative impact on the country.

“What this threshold is, is not yet certain. But certainly government revenues and development expenditure will be affected,” she said.

“Petroleum industry investments will also be affected, particularly in exploration and production. That is problematic since once prices go up, supply will be contained,” she added.

On her outlook on the growth of the Asean region, Zeti said the region has all the preconditions to remain on a steady growth path, but said there were also a number of factors that could impede the region’s growth.

“In Malaysia and in some of the neighbouring countries, it is education. It’s not just about investing money into education, it is about having increases in productivity, leveraging on technology and having knowledge-based industries,” she said.

Zeti added that leakages are another area which needed to be addressed.

“I believe that we have the potential to have infrastructure in place as well as investment in infrastructure and that is also to ensure that resources are being channelled towards what they were obtained for. It is all about avoiding leakages. If we have leakages, we will not draw the kinds of investors we want to see in our region. Corruption also has to be minimised,” she said.

Earlier in her keynote address, Zeti said economic growth in the region is expected to be sustained at an average of 5.3% over the next five years to reach US$3.6 trillion (RM12.38 trillion) by 2019.

Also present was AirAsia X Bhd chairman and former international trade and industry minister Tan Sri Rafidah Aziz who said the Asean Economic Community (AEC) should be driven by the private sector.

“Moving forward, it is not governments that should be driving this, but rather their role will be to assist and promote this initiative. The private sector should be the driving force behind the AEC,” she said.

 

This article first appeared in The Edge Financial Daily, on December 2, 2014.

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