Malaysia Should Adopt Phased, Fiscally Prudent Approach To Petroleum Reserve Stock -- Economist
By Nurunnasihah Ahmad Rashid
KUALA LUMPUR, July 16 (Bernama) -- Malaysia should adopt a phased and fiscally prudent approach if it decides to establish a national petroleum reserve stock, ensuring the initiative strengthens long-term energy resilience without placing unnecessary pressure on public finances, according to IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan.
He said the government should avoid replicating large-scale strategic petroleum reserve models adopted by countries such as the United States and Japan, given Malaysia’s different fiscal capacity and energy risk profile.
“The key question is not whether Malaysia needs the largest reserve, but what level of reserve is appropriate given its fiscal capacity and energy risk profile.
"Any investment must pass a rigorous cost-benefit assessment because public resources are limited and competing priorities such as healthcare, education and food security also require funding,” he told Bernama.
Prime Minister Datuk Seri Anwar Ibrahim yesterday said the government would study the need and strategies for creating a national petroleum reserve stock to strengthen the country’s energy security amid growing geopolitical uncertainties.
Nevertheless, Mohd Sedek said the economic cost of being unprepared during a major supply disruption could ultimately exceed the initial investment required to establish an appropriate reserve.
"Therefore, I would support a phased and fiscally prudent approach. The study should determine the optimal reserve size, financing model and implementation strategy, while integrating it into a broader economic security framework.
“The objective is not to build the biggest reserve, but to build the smartest and most cost-effective one,” he added.
He said the government’s immediate priority should be to conduct a comprehensive risk assessment to determine the optimal reserve size, financing model and operating framework before embarking on physical infrastructure development.
He added that policymakers should also evaluate partnerships with the private sector and ensure any reserve remains scalable, commercially viable and fiscally sustainable.
"Only after establishing a clear economic case should the government move towards gradual implementation,” he said.
-- BERNAMA