NOW AND BEYOND: Sector to play bigger role in driving Malaysia’s growth
(Business Times) - The oil and gas sector is expected to play a bigger role in driving the Malaysian economy this year and beyond, said Minister in the Prime Minister’s Department Datuk Seri Idris Jala.
The sector contracted in terms of production last year, bogged down by problems faced by Murphy Oil Corp in Malaysia’s first deepwater oil field in Kikeh, offshore Sabah.
The Murphy Oil production level was impaired because of the presence of sand in the oil, said Idris, who is also Performance Management and Delivery Unit (Pemandu) chief executive officer.
Still the oil and gas sector remained a mainstay of Malaysia’s growth last year. It accounted for about 20 per cent of the country’s gross domestic product (GDP) in 2011.
“Despite a 5.7 per cent contraction (in the sector’s output) last year, we posted a 5.1 per cent growth in the GDP,” he said.
Idris estimated that Malaysia could have registered a 6.5 per cent GDP growth had it not been for the decline in output from the sector last year.
He was speaking to reporters after briefing representatives of foreign missions and business councils on the progress and updates ofthe Economic Transformation Programme (ETP) yesterday.
Although the “sand in the oil” problem is expected to remain for the next two years, Idris said overall oil and gas output is expected to be ramped up this year following completion of various maintenance work in Peninsular Malaysia.
“Hopefully, production will improve following the completion of the maintenance work at Jerneh platform and the completion of the tie-in of Berantai and the Malaysia Mobile Offshore Production Unit (MOPU),” he added.Idris said Malaysia will see a production upswing with huge investments in the sector over the next 10 years.
“It will allow us to grow the rapidly growing services sector to plug in and play a more prominent role,” he said.
Idris said indications of growth in the oil and gas as well as other services sub-sectors have been positive as indicated by the National Key Economic Areas (NKEAs).
These are seen in the tourism, financial services, education, wholesale and health services.
International Trade and Industry Minister Datuk Seri Mustapa Mohamed, who was also present, said investments in the oil and gas sector will continue to remain strong and spur private investments, surpassing numbers in the manufacturing sector.
The government's revenue from Petronas (Petroliam Nasional Bhd) remains high, buoyed by high prices as well as contributions from its overseas operations, he added.
Investments in the oil and gas sector and its ancillary support services announced recently amounted to some RM132 billion.
They included Shell-Petronas' RM35 billion Enhanced Oil and Recovery project as well as Petronas' RM60 billion Refinery and Petrochemicals Integrated Development Project (Rapid) in Johor.
On the liberalisation of the services sub-sector, Mustapa said of the 17 identified, eight have been allowed to hold 100 per cent foreign equity.
The remaining nine will be liberalised in phases by year-end.
They include primary and secondary education services, courier services, telecommunications services (network facilities provider), specialised medical and dental services, legal services, architectural services and engineering services.
The biggest difficulty has been legal services, Mustapa said, adding that some amendments have to be made to the Legal Profession Act to enable the move.