OIL prices are falling and dragging the global economy with them. But for many importing countries, such as Japan, Korea and many more, the drop is somewhat more celebrated than dreaded.
It not only helps them reduce energy costs and oil subsidies but also many of their enterprises to cut production costs which may lead to increased product competitiveness, and in the long run, contribute to domestic consumption and exports.
As we know, nothing interesting is ever one-sided.
The oil price drop may put smiles on many faces but even more are worried about its resultant effect on the global economy.
Many oil-exporting countries are faced with greatly reduced revenues. Countries, including Russia, Iran and Venezuela have been traumatised by the downward spiral of global oil prices. These countries are now battling shrinking domestic growths and declining economies. The situation is distressing.
Although Malaysia is relatively rich in oil and does export the resource, it is also increasingly importing petroleum and other-related products, and in 2014, became a nett oil-importing country.
Malaysia has not benefited from the oil price drop as more than 20 per cent of the government’s revenue relies on oil taxation, thus warranting a review of the country’s financial policies.
Prime Minister Datuk Seri Najib Tun Razak recently announced a number of counter-measures such as ceasing non-essential public procurements and suspending the National Service programme for a year to cope with the impact of plunging oil prices. This just goes to show how much our economy depends on petroleum and raw products such as palm oil.
It is only the beginning. The recent financial review was primarily to cushion the knocks from the drop in oil prices. The real challenge is changing the structure of the economy and leading the country towards becoming a high income nation.
To do this and avoid an economic recession, how are we going to promote our niche areas? How are we going to increase our production speed and improve competitiveness of the private sector? How are we going to reduce corruption and avoid further loss in our funds and foreign exchange?
These difficult questions need to be answered by the power that be, especially when many of the government’s measures and policies are still based on the New Economic Policy, announced in the 1970’s.
National unity is vital in ensuring national resources are efficiently and equitably utilised. The reverse will only lead to the demise of a united society and the country’s competitiveness in facing the greater challenges of globalisation.
When a government is frantically adjusting its economic policies while calmly reassuring the people there is no crisis to fear of, it may be a sign that the country is anticipating bigger problems ahead.
Now, when international oil prices plummeted and our country, like most around the world, felt the squeeze, would our political structure ultimately undergo changes like what German philosopher Karl Marx once said: “The underlying structures (economic basis) determines the superstructure (politics).”
Only time will tell. (From Oriental Daily)