KUALA LUMPUR: The ongoing global supply and energy crisis should not be viewed solely as an oil price issue, but as a broader physical disruption that could gradually affect households through rising costs of living, according to Tan Sri Mohd Hassan Marican.
The chairman of the Crisis Management Task Force of the National Economic Action Council said the impact would likely be felt in stages, beginning with fuel and logistics costs before spreading to petrochemical feedstocks, plastics, fertilisers, manufacturing and construction.
"Eventually, it will reach households through broader cost-of-living pressures,” he told BERNAMA in an interview recently. He warned that an exclusive focus on fuel prices risks underestimating the scale of the disruption, as its effects will gradually extend across various sectors of the economy if it continues.
"Treating it purely as an oil price issue is a very common misconception,” he said, adding that it is "fundamentally a physical supply crisis”, noting that in such situations, financial resources alone cannot resolve the issue if the supply is disrupted.
Malaysia has structural buffers but remains exposed
According to Mohd Hassan, Malaysia is in a relatively stronger position than many countries due to its established oil and gas ecosystem, domestic refining capacity, and experienced industry players and institutions like Petronas, which can play a stabilising role during periods of disruption. However, he said the country is not immune to external disruptions as it remains exposed to external shocks as an open economy.
He pointed out that the government has already put in place a range of measures that have helped stabilise conditions during the initial phase of the global supply crisis. These included targeted fuel subsidy mechanisms under BUDI MADANI and Subsidised Diesel Control System (SKDS), expanded cash assistance through Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA), as well as strategic food supply interventions through Jualan Rahmah MADANI and Agro MADANI.
Additional financing support for micro, small and medium enterprises (MSMEs) launched recently, he said, would also help businesses manage rising operating costs.
Coordinated national response
Mohd Hassan said Prime Minister Datuk Seri Anwar Ibrahim has consistently reaffirmed his commitment to safeguard the welfare of the rakyat, particularly lower-income groups and MSMEs. While Malaysia has strong fundamentals and institutional strength to weather these challenges, he stressed that managing the crisis requires national discipline and coordination across government, industry and the public.
"This is not a challenge any single institution can manage alone, as it requires a whole-of-nation approach,” he added.
Balancing relief measures and fiscal pressure
Mohd Hassan said the government faces a delicate balancing act in protecting the people while maintaining long-term fiscal sustainability. He said subsidies and targeted support measures remain important in the short term to cushion households and businesses from the impact of inflation, logistics costs and the broader cost of living.
However, he cautioned that prolonged subsidy expenditure, if global energy prices continue to rise for an extended period, could carry fiscal consequences for other national priorities, including healthcare, education, infrastructure and economic development. He noted that many countries, including Malaysia, are gradually shifting towards more targeted subsidy mechanisms rather than broad-based blanket subsidies to improve efficiency and reduce leakages.
"Fiscal resilience is also part of national resilience. We must support the rakyat during periods of crisis, but we must do so in a way that remains sustainable and does not excessively burden future generations by weakening public finances or reducing development capacity.
"When public finances are too stretched and become unsustainable, countries become more vulnerable to future shocks,” he explained.
Outlook and public assurance
Mohd Hassan was also asked what assurance could be given to the public that the overall situation remains under control despite rising geopolitical and economic uncertainty globally. He said the global situation was serious and highly unpredictable, and it was important to be upfront with the public about the challenges ahead, adding that external headwinds could persist for some time.
However, he said Malaysia was not entering the period from a position of weakness, citing strong institutions, domestic energy capabilities, experienced leadership and close coordination between the government and industry. "Crucially, we have weathered severe crises before, and the lessons learned from the past significantly fortify our response capacity today,” he stressed.
Mohd Hassan said government priorities remained focused on maintaining national stability, securing vital supply lines, shielding vulnerable communities, and ensuring that our critical economic sectors continue to run smoothly. He said policy direction would continue to emphasise resilience, targeted assistance, fiscal discipline and strengthening strategic capabilities in areas including energy, food security, logistics and industrial supply chains.
He emphasised that the period ahead would require continued preparedness and cooperation across all sectors, but expressed confidence in Malaysia’s ability to adapt. "Malaysia has faced major global shocks before, and the key now is to remain calm, informed and prepared as we navigate a more uncertain global environment,” he added. - Bernama
