Monday, January 18, 2016
GST from the people save the day for oil shocked Malaysia
And until 2014, about a third of government revenues came from Petroliam Nasional (Petronas) - the sole Malaysian entry in the Fortune 500 list of the largest companies in the world.
Petronas, with operations in 50 countries, reported turnover of RM188 billion (S$61.1 billion) for the first nine months of last year, and net profit of RM23.8 billion.
But the seemingly bottomless dive in oil prices over the past 18 months has ended the days of Malaysia living like a trust-fund kid. A dim global economic outlook has also depressed another major Malaysian commodity export, palm oil, as its price follows global oil gyrations.
Malaysia will announce a Budget revision on Jan 28 to take into account lower oil prices, as the current Budget is based on average oil prices of US$48 a barrel. The government said each US$1 drop in oil prices slashes RM300 million from its annual revenue.
Some leading banks, such as Goldman Sachs, are looking at US$20 a barrel as a possibility. Brent crude for March delivery traded in Europe ended the week at US$28.94 a barrel.
Prime Minister Najib Razak, who is also Finance Minister, has touted the 6 per cent goods and services tax (GST) as Malaysia's "saviour".
But while last year's introduction of GST will provide a much-needed RM40 billion to make up for lost oil revenue, it will rip out a huge chunk from private consumption.
Posted by wikisabah at 4:37:00 PM