PUTRAJAYA: Malaysia should seize the ongoing West Asia crisis as an opportunity to rethink its economic model and enhance long-term growth, said Capital A Bhd
chief executive officer Tan Sri Tony Fernandes.
He said global supply disruptions, particularly involving key routes such as the Strait of Hormuz, could have prolonged economic effects on the country, underscoring the need for Malaysia to remain resilient.
"Malaysia has done well diplomatically, but this crisis is an opportunity to rethink our economic model, from subsidies to energy to productivity,” he said at the "Malaysia’s Strategic Position in a Turbulent Global Economy” forum here today.
Fernandes said that to achieve and maintain growth, the country must make difficult decisions, especially regarding the re-evaluation of subsidies.
"We need to move away from this subsidy mentality. The billions spent on subsidies could be redirected into more productive industries, industries that create jobs, drive growth, and strengthen the economy,” he said.
Fernandes also said the current situation presents an opportunity to reassess energy security.
"I am a strong advocate for nuclear energy; the safety concerns are outdated, technologies like small modular reactors are much safer, and Malaysia should aim for energy independence,” he said.
About the aviation sector, Fernandes said the current crisis, driven by surging energy prices and supply disruptions, is more severe than the COVID-19 pandemic.
"During COVID, there was an understanding that you could not fly. In this instance, we are flying, and everyone wants to be paid on time, while oil prices have literally doubled overnight,” he said.
Fernandes said airlines are facing significant cost pressures after jet fuel prices rose sharply from about US$85 per barrel to between US$180 and US$240.
"We went into Hari Raya having sold tickets at a jet fuel price of US$85, and then we woke up one day and jet fuel had gone up to US$180 and peaked at US$240. In my time, we have never seen anything like it,” he said.
Fernandes added that refining margins also surged from about US$20 to US$120 within a week, compounding the impact on airlines.
"I have been talking to the government about extending credit so that we can catch up, because obviously we have to increase fares, but that takes time to reflect the oil costs we have already paid for,” he said. - Bernama
