Oil Price Increase Also Poses Challenges To Oil-Producing Countries -- Tengku Zafrul

KUALA LUMPUR, March 13 (Bernama) -- The rise in global oil prices not only puts pressure on oil-importing countries but also impacts oil-producing countries such as Malaysia, said Malaysian Investment Development Authority (MIDA) chairman Tengku Datuk Seri Zafrul Abdul Aziz.

He said that although many people assume that oil producers like Malaysia would reap large profits with oil prices rising, the situation is more complex in reality.

According to him, when oil prices rise, there are usually three main effects on the nation’s economy.

“First, the prices of goods may increase. When transportation costs rise, the prices of imported goods arriving in Malaysia can also go up.

“Goods produced domestically can also be affected because many raw materials and components come from abroad,” he said in a video posted on the X platform today.

The second effect is the possibility of a slowdown in the global economy, he noted.

“When oil prices increase, business costs rise. Some companies reduce production and there are also those that postpone investments.

“When the global economy slows, demand for Malaysian exports can also be affected,” he said.

On the third effect, Tengku Zafrul said the impact of rising oil prices is not the same for every country.

“About 80 per cent of countries in the world are oil importers, so for most countries, high oil prices actually put pressure on their economies,” he said.

Tengku Zafrul said that for Malaysia, the impact is mixed because the country would earn additional revenue from the oil sector but at the same time must bear high subsidy costs.

-- BERNAMA