With the air of uncertainty being felt as a result of falling oil prices, i'd like to share this very well explained article below.

i couldn't copy and paste some of the tables and figures because they are images. but you can visit the link to view in its original form.

Basically, the summary of it is:
1) Malaysia is actually (MOST SHOCKING REVELATION) a net importer of crude oil
2) Economy will shrink overall on low oil prices, but felt unevenly
3) Government revenue will fall, but it's not as high impact as it could be for reasons explained inside the write up
4) Good news is that the balance of trade could move in Malaysia's favor
5) And inflation is kept in check

Let's hope things will not be so bad for us in 2015.



Original Source: Falling oil prices and its effect on Malaysia

This post has been edited by METALRAGE: Jan 14 2015, 07:03 PM

nice of u to start this thread.

i'll just say a few things...

... actually, i think our gomen never dreamed about the scenario where oil can be usd45 as seen by the 110 used in 2015 budget. so, there u have it - our "brightest" brains at work. ya, now, maybe frantically to do a new budget with 80? i hv done many budgets n i can say i hate to do one with a 30 or 50% cut in 30% of the revenues!

.. net importer or exporter, hmm... this one, who knows unless the civil servants collecting data are doing their job and show us. but the chart in the article is flawed - it is in barrels and not in usd or rm. msia export light crude of a higher value and import heavy crude with a lower value. the real figures aren't there.

.. petrol subsidy may have been thrown out, but we still hv other subsidies. subsidies, special privileges, cash handouts, etc. distort the real economy. so, even if we benefit from low oil price as an importer, there is no telling where the benefits go. more so when gomen can, at the stroke of a pen, remove this or that, or add this or that. what if they impose a new petrol tax to collect more revenues? or create half a million new jobs out of the blue?

... i like to think int'l markets are efficient. if the out-of-country brains think and did what they did recently and now - selling bursa stocks, rm going 3.60/usd, we conclude external parties do not see it as positive, at least not for the time being.

.. perhaps it is temp, not enough facts, too much bs floated around. or we simply don't even know!!

just a few thoughts of my own....

This post has been edited by AVFAN: Jan 14 2015, 07:36 PM

TS,

1) Your source is from a web site that the main business is property loan. Now, if the economy is going to hell and property market is going to crash, would you EXPECT this source to tell you?? Of course not. It will be out of business.

2) When the oil price was at record high during 2012, THE GOVERNMENT increase its debt at 40 to 50 billions. THE GOVERNMENT is expected to increase its debt around the same amount at 2015 if the Oil Price is at high level with GST. THE QUESTION back to YOU is this, what do you THINK THE GOVERNMENT will do NOW

A) Increase more taxes

B) Cut spending SUBSTANTIALLY

C) Increase DEBT at even higher pace.

A reasonable person will believe that (A) to © will happen together. Now, if that happened, what will happen to the ECONOMY?? Please noted that 50+% of KLSE is owned by THE GOVERNMENT, GLC, and GLIC.

This ship is sinking fast. If you do not know this, it is TOO LATE for you.

https://forum.lowyat.net/topic/3374996

Dreamer

this one is contentious...

likely cut all... except the really wasteful ones incl the notorious year-after year-nobody-does-nothing highlighted by a-g.

AVFAN,

It is NOT as long as it only affects RAKYAT but not THE GOVERNMENT. For example, oil subsidy cut. Gas subsidy cut and increase electric bill..

Dreamer

Things will be tough going into 2015 for sure. What the article has shown is illuminate the various moving parts affected by falling oil prices, and is not a commentary piece on the entire economy as a whole when all factors are taken together (gst, new potential taxes which aren't even here yet, subsidies unrelated to petro dollar which would have been there in the first place) etc.

Ceteris paribus.

Malaysia is actually known as an oil exporter as oppose to an importer. Its true we do sell our light sweet crude and buy heavier fuels from overseas hence the net oil importer belief.

Askwhy

If 1MDB fails the gov is in shit. And lets not forget the second storm brewing with PFI which is under the ministry of finance.

Although the government did insure only 5bil of the loan lets not forget the cascading effect of a default at that size.

Back to oil.....didnt najib say he was going to revise the budget.

I was kinda sceptical when dreamer first said the ship is sinking....now i am probably in the lifeboat with him on this.....this week another 200mil gone from the markets.

Good thing i brought usd since foresaw impending doom anyway.

Malaysia relied to much on black gold......now that black gold is cheap taxpayers will be first to pay the price....second the consumers. Malaysia should serve as a example on how to save your money for rainy days and not spend like you own the world.

inefficient public spending and abuse of office is a constant whether or not oil prices are high or low. 1MDB, PFI, PKFZ, BR1M, Youth Car Scheme, white elephant projects, these are issues and expenditures that most people are unhappy about, but have nothing to do with oil prices. discretionary expenditures are a function of total govt revenue, regardless if it came from oil or gst or dug out of the gold ore of the rakyat's noses

in critical thinking, one should have the ability to separate one issue from another to assess each merit unto itself. oil prices are ONLY ONE of the levers on our economy. i started this discussion to objectively assess the impact of falling oil prices on Malaysia which also seems to be the point of that article. i believe the article got all the moving parts correct, some of which are not immediately obvious to joe public.

there is already enough avenues to vent your frustrations on our administration as well as debate the direction of our entire economy on a whole

try not to bring in unrelated issues to murk an objective discussion. it greatly helps the quality of the discussion

Net importer? Don't think so.

To my knowledge Malaysia exports quite an amount of HSD and Bio-Diesel.

There is a reason why bloomberg is highly held for its market research and news.

I dont really bother much reading the rest.

Oil/gas is the main energy driver in most markets. Lets stick to Malaysia.

Malaysia's main source of income is derived directly and indirectly from 2 main products palm oil and oil/gas. Its effect on the economy in Malaysia is wider than anyone could anticipate and to discuss its falling prices to the economy is in tantamount to discuss the economy of malaysia.

Assuming everyone here is a brilliant minded average joe:

Lets look at KL the life and breath of Malaysia. Almost 70% of businesses there derive some sort of income directly or indirectly from the twin towers.

The oil and gas industry is also one of the main paymasters to many workers in and around Malaysia.

Loss of revenue and if people lose jobs = less taxes.

Once people lose jobs.....with current household debt at all time high.....will lead to the ever increasing defaults when people cant pay. And well brilliant minded average joes will know what that means.

Now tell me what other industry in Malaysia pays as much as the oil and gas industry? Only investment banking. And who do you think can afford all the houses at current prices?

Iskandar is a perfect example of oil and gas relation with the local economy. Due to pengerang, iskandar malaysia property prices shot up like crazy. And who is going to live in all this properties if demand for oil doesnt drive up employement?

Well investors and the drop of the ringgit has spoken against Malaysia's positiin in this debate.

Its too late to react now. If you haven't done anything to spread your risk previously, all you can do is just sit back and watch. And possibly just hope for the best.

Investment is about risk management. Not putting all eggs into 1 basket. It is a long term planning. Get your portfolio balanced in both your home country and overseas assets. So that currency fluctuation will offset each other 90% of the time. Also get your portfolio to involve across the industries so that sectorial effect (like oil price slump now) will not have substantial effect overall.

My only weakness is the distrust in precious metal. Maybe it is good time to look into gold as everyone is avoiding it. I have a feeling that if Russia is kept victimised by the West, they can just "slip" a nuclear weapon to the terrorist and get it detonated in 1 of the oil producing country. Then all hell break lose and oil will be in $150 region and gold hit $3000. Just my conspiracy theory on a Friday...

wad to do ot get on d lifeboat?

Shouldn't be too pessimistic about Malaysia ... Shall see the glimpse of light when crude price stabilizes ,Malaysia's fundamentals are not as bad as a decade ago , hope for a possible rebound after a bumpy ride

ya, kinda a little late at this time. but... one is never too late to do anything! still possible to act to protect a bit, spread it out a bit, some in foreign denominations. conspiracies theories aside, one's better off looking for answers to questions like... where r v heading longer term?

i m not so sure if v r better off than in 1998... at that time, v may have less fx reserves but v dun hv almost a rm 1 trillion debt then.
while i do think crude n cpo will stabilize n firm in the next 24 months, what else do v hv besides this hope - some producers will cut production or the rest of the world will consume more oil? manage the nation by "hope"?

where is the self help? that is, cut back on expense n wastage, projects n plans to increase production/productivity? i hardly hear of investments in agri or factories these days. only more wastage (n nobody does nothing), "funds dunno gone where", more taxes, gst...

pardon me if i m in the minority who just don't see "how things can improve by doing nothing".


added, good read:
long article by sam chee kong on rm, usd, oil, debt, budget:


This post has been edited by AVFAN: Jan 17 2015, 11:34 PM

Now is see brim is giving an amount of 54mil. And this isn't including the flood relief loans. Really worry.

Why I got the feeling that next round of petrol price changes would be at minimal level compare with previous month

At 3.6-3.7 and oil at 40, how low further can it go ? I don't think its a good idea to shift now. In fact I am thinking of profit taking. But that is just my position though...If all my holdings are in malaysia and RM, I would just see it through as the downside is minimal. There are still some KLCI stock which is at attractive prices and yield now

Don't know why so many people have the wrong idea that Malaysia is very dependent on oil/gas and palm oil.

Our debt to gdp levels were far higher in the past:

http://www.tradingeconomics.com/embed/?s=m...ent-debt-to-gdp

this is the billion rm question, isn't it?!
i doubt anyone knows, not even bnm. but one can take a position, maybe as a hedge.
i m of the view the state of my's economy/rm is not all about oil.

a diff perspective.... when sgd=rm2.30, we thought it had gone far enough. then 2.50. now, almost 2.7.
how low can it go? 2.80, 3.0? or return to 2.50, 2.30? reasons?

i don't know what gomen debt/gdp can really tell us.
might be more useful to look at total int/ext, public/private, gomen/household debt levels...?

This post has been edited by AVFAN: Jan 18 2015, 10:14 AM