In 2011, the ‘slide’ in global crude oil value has left a trail of impairment in its wake particularly to Malaysia economy. However, the government insists on pushing the industry forward by instilling large portions of its budget to dominate the oil and gas hub in Asia Pacific Energy. Should these budgets go to other major sectors? Is it still worth it to depend on this industry? Let us embark on a journey to discovers what currently lies in Malaysia.
How does oil and gas shape the future of Malaysia?
Triggering the growing economy and potential of oil and gas industry in Malaysia
Petroliam Nasional Berhad (PETRONAS) has becoming more active in distributing contracts to smaller oil and gas companies in Malaysia, called Small Field Risk Service Contract (SFRSC). This initiative benefits the local companies to develop into competitive companies globally. It also opens opportunities for the smaller field companies to explore new horizons for hydrocarbon source, which attracts investment from external oil and gas companies from the confidence of the improving fields. In fact, in the most southern part of the peninsular, Johor Petroleum Development Corporation (JPDC) will become an important trading hub of oil and gas industry, which also opens opportunity for better technological transfer and partnerships with other international companies.
Educational integration and producing highly skilled personnel and workforce
Predictions show that the sector will continue to grow, with the trends of increasing energy consumption due to the rapid growth of industrial activities. In educational level, the focus to increase the oil production leads to research and development of field machineries and tools to become more efficient. Collaborations with the local institutions will boost the academics to implement advanced technology from other countries in addressing the solutions to increase and improve the quality of oil consumption.
The energy sector has always been an important sector to the economics growth of most of the developing country like Malaysia. This is because, in 2014 the energy sector in Malaysia had contributed about 20 percent to the total gross domestic product (GDP). To be precise, 76 percent of that value was made up only by oil and gas sector. The sector has created huge employment opportunities and skills transfer for thousands of Malaysians ever since the oil discovery in Sarawak in 1910. This shows that oil and gas sector contribute significantly to not only in economics of Malaysia but also to social impact of the country as well.
From utilitarianism perspective, the government of Malaysia has been planning macroeconomically to ensure a long-term success in the industry by becoming the top oil and gas hub in the Asian Pacific Energy. One of the initiatives by the government is through the Economic Transformation Programme (ETP) by focussing and investing more on the 12 National Key Economic Areas (NKEAs). One of the NKEAs is Oil, Gas and Energy sector. This will result in large number of foreign oil companies to start investing in Malaysia.
The Future Possible Outcome: What to expect
Environmental effects on outgoing activities
Though oil and gas industry have been a major aspect on the nation’s economic growth. Through history, several environmental disasters had occurs leaving devastating impact on the aboriginals and nature itself. However, such issues do not abstain the government to build more plants and increase production under the rhetoric slogan of “national developments”. Major oil and gas plants are located offshore around the Malaysian peninsular which have induced cases of oil spills, further development will cause a lot more damage to the marine ecology and disturb local fishermen activities. The Malaysian rainforest holds one of the world’s great centres of biodiversity in the world, in 2012, a major project to install gas pipeline stretching over 120km across the east coast of Malaysia have disrupt the natural habitat of various animal species along with deforestation, pushing aboriginals whom depends on earth’s natural resources to survive to cope with changes brought by the industry.
Evaluation of studies on the socio-economic effects of fossil fuel investments
Countries that are rich in natural resources often suffer from oil/resource curse in which the country experiences negative social and environmental impact despite an increase in wealth and revenues. One of the effects of this ‘curse’ is the Dutch Disease when an economy in the country suffers negative impact due to the sharp inflow of foreign currency, for example the small-medium enterprises (SME) in Malaysia which makes up for 36% of the country’s economy as of 2016. This issue is key as this would broaden the gap between the rich and poor in Malaysia and would affect the country in terms of social standards of the country. As such, there would be a rise in the poverty rate which leads to an incline in crime rate as public would feel pressured due to the rising cost of living. The National Bank and government should take a Black and White approach by imposing a policy that would limit the effect of Dutch Disease towards affected sectors.
The intuitivism moral doctrine states that right and wrong are often intuitive. In the cases above, the results of government investing and taking advantage of natural gas reserves prove that there are negative impacts in terms of environmental and social economy. However, these effects are not as black and white as explained in a formal doctrine such as the utilitarianism where actions such as stealing, lying etc. are discussed. However, by intuition we can see that the continuation of investment in fossil fuels will impact the country and public.
It is normal for public and government to want to invest budgets in leading industries, which in this case would be the fossil fuel industry. This could be the key towards an independent economy for Malaysia as well as an opportunity to enhance the skills and technology within the country which in turn would allow for technology and intellectual exportation. However, is it worth destroying the chances of other industry surviving in this millennium? As presented, the effects of these investment could mean that there will be a threat towards other local industries as well as an endangerment towards the ecosystem. Therefore, it is the opinion of this cohort that investments made by the government should be done in modesty and diversified