MIDA chairman Tengku Zafrul explains that higher oil prices present a double-edged sword for Malaysia, bringing revenue but also higher costs and economic risks.
KUALA LUMPUR: The global rise in oil prices presents significant challenges not only for importing nations but also for oil-producing countries like Malaysia, according to Malaysian Investment Development Authority (MIDA) chairman Tengku Datuk Seri Zafrul Abdul Aziz.
He explained that the common assumption of large profits for producers is an oversimplification of a more complex economic reality.
Tengku Zafrul outlined three primary effects a sustained oil price increase has on a national economy. The first is a potential rise in the cost of goods, driven by higher transportation expenses affecting both imported and domestically produced items.
“Goods produced domestically can also be affected because many raw materials and components come from abroad,” he said in a video posted on social media.
The second major effect is the risk of a global economic slowdown, as increased business costs lead companies to reduce production or postpone investments.
“When the global economy slows, demand for Malaysian exports can also be affected,” he noted.
The third factor is the disproportionate global impact, with approximately 80% of the world’s countries being net oil importers for whom high prices create economic pressure.
For Malaysia, the situation is mixed, as the nation gains additional revenue from the oil sector while simultaneously bearing high subsidy costs.
