Even Saudi Arabia and Brunei are not spared

By MT Webmaster On Dec 20, 2017

Eric See-To

On top of a planned 80% increase in petrol prices due in Q1 2018, Saudi Arabia has just increased electricity prices.

While still cheaper than Malaysia (but not by much for the lower consumers), Saudi’s increase will see a doubling and tripling in their electricity prices.

Since the 80% collapse of global oil prices, Saudi Arabia has been running huge budget deficits to run their country.

The Saudi Arabian Monetary Authority’s net foreign assets have shrunk to US$485.9 billion in October this year from US$737 billion in August 2014 as the government liquidates them to cover the budget deficit caused by low oil prices.

Which is why Saudi and UAE will implement a 5% GST starting on 10 days time.

Unlike Malaysia, their GST will have much less exemptions.

Certain products and services in both countries (such as healthcare) are exempt but it will apply to many daily items including food, fuel, utility bills and mobile phone charges.

Yes… unlike Malaysia, Saudi’s petrol and raw food will have 5% GST.

Meanwhile, Brunei which depends on petroleum resources for 60% of their economy and 95% of their exports is also not spared.

Brune’s govt spending has dropped to B$5.3 billion for 2017. This is a drop from B$5.6 billion in 2016, B$6.3 billion in 2015 and B$7.3 billion in 2014 which resulted in many cuts in health-care, citizen benefits, govt servants pay and allowance and a hiring freeze.

Both Brunei and Saudi Arabia went into recession due to this drop in prices.

This goes to show that having huge natural resources does not mean your country can get away with undisciplined financial management and sustainable prudent economic policies.

It is very praise-worthy that despite a 80% drop in petroleum prices, Malaysia which had also depended heavily on oil revenues and exports did not suffer as badly as those other countries.

In the past, when the prices of our main industries collapsed like the 50% drop in commodity prices in the mid 1980s under Mahathir, Malaysia went into a bad recession.

Even though petroleum prices had dropped 80% at one time, Malaysia did not go into recession but our economy continued to grow during that difficult period and the growth has now accelerated this year.

PM Najib’s move to quickly reduce our reliance on petroleum revenues when he started as PM from 44% to 14% of govt revenues have now been proven to be the correct decision to “Save Malaysia”.

This is why IMF and World Bank has such high praises for Malaysia and the government’s policies.