Question

Oil and fuel industry

Malaysia’s energy security strategy has always been to export its premium Tapis sweet crude oil and import low-grade oil to refine in its downstream facilities. However, to move up the value chain, Malaysia is gearing up to increase its refining capacity to become a net oil product exporter. The Pengerang Integrated Petroleum Complex (PIPC) in Johor, and Sipitang Oil & Gas Industrial Park (SOGIP) in Sabah has been established to cater to this growth, almost doubling the refining capacity nationwide from 588,000 bbl/d to 1,158,000 bbl/day.

The discovery of gas reserves off the coast of Sabah and Sarawak, augurs well for Malaysia. With expected increase in global production and demand of liquified natural gas (LNG), Malaysia stands to gain in the LNG growth area with proven gas reserves of 1.183 trillion cubic meters of LNG. This puts Malaysia at 24th in the global ranking for LNG reserves. However, even with expanded LNG facilities coming online, Malaysia is expected to gain smaller increments in market share due to fierce competition from other LNG-exporting countries within the region.

The impact of low commodity prices on livelihoods of Malaysia in the plantation sectors such as palm oil sectors which is a local and there is also the need for an alternative fuel energy from the outside country.

To overview this problem that are happening in the oil and fuel industry are that low commodity prices on livelihoods of Malaysia in the plantation sectors the Budget 2020 has proposed a palm oil replanting loan fund of RM550 million. This loan is entended to smallholders collateral-free at an interest rate of 2% per annum with a tenure of 12 years. Not only this but also RM 27 Million will be allocated to support the Malaysian palm oil Boards (MPOB)to market palm oil internationally and counter anti-palm oil campaigns.

For the local expectations are providing a fund will help in make a good living out of it and can help the country reach the expected amount of palm oil production. While the international expectations are the world is looking for alternative sources of fuel. And B20 biodiesel is a great alternative for foreign export and the demand for this fuel is right among the 1st world countries of the world.

Question : How budget 2020 (Malaysia) rectifies the issues above ? brief answers needed.

Answer 1

As the world is looking for an alternative source of fuel oil production, and Malaysia is aggressively searching for low priced oil producing commodity, so Budget 2020 will serve both the purpose. Budget 2020 has proposed a palm oil replanting loan fund of RM550 million, so it would accelerate the production of palm oil in the market which as a low priced commodity and can be exported as an alternate fuel to the outside country.