Prices of goods to remain stable, Finance Ministry assures nation
The increase in fuel prices from a possible war on Iraq will not lead to serious inflation in Malaysia as the commodity is a controlled item, assured Deputy Finance Minister Shafie Mohd Salleh.
The government is also closely monitoring the prices of other products and services to ensure that there is no corresponding increase with the fuel price hike, he told Dewan Rakyat in response to a question from Railey Jeffrey (BN-Silam).
The increase in fuel prices from a possible war on Iraq will not lead to serious inflation in Malaysia as the commodity is a controlled item, assured Deputy Finance Minister Shafie Mohd Salleh.
The government is also closely monitoring the prices of other products and services to ensure that there is no corresponding increase with the fuel price hike, he told Dewan Rakyat in response to a question from Railey Jeffrey (BN-Silam).
Shafie said an attack on oil-rich Iraq would not severely affect the country's oil supply as Malaysia is also a producer of the commodity.
However, he added, such a war will affect the world economy, depending on the duration of the war.
"If the war lasts for two to three months, it is very much likely that oil production will be affected," he said, adding that this will increase fuel prices and affect freight and share markets.
"The war will also affect investors' confidence."
He said the International Monetary Fund (IMF) will review the world economic growth for 2003 from 3.7 percent to a lower rate if the US-led war breaks out.
'Prepared for worse'
He nevertheless said that Malaysia is prepared for the worse as it had withstood the previous economic crises stemming from the 1991 Gulf War and 1997 Asian financial fallout.
Speaking to reporters at the Parliament lobby later, Shafie (
photo
) said Malaysia's strong economic fundamentals would prepare the country to face the dire consequences of war.
"Besides, we are managing our debts prudently and working on corporate restructuring exercise," he said.
Malaysia's economic diversity will also help the country pull through, he added.
"For example, even though our electronic products export will be affected, there are many other economic resources that we can rely on."
Currently, 3.3 percent of Malaysia's export are generated from the petroleum-related product.
To a question, he said, the higher oil price (which currently stands at US$34 (RM129) per barrel) will benefit Malaysia.
However, he could not quantify the benefit in monetary terms.
