Southeast Asia faces diverse energy challenges: Morgan Stanley
Southeast Asia faces diverse energy challenges: Morgan Stanley
Agence France-Presse
Singapore
Southeast Asian economies face diverse challenges in coping with
high oil prices, among them removing costly fuel subsidies and
attracting investments into the energy sector, U.S. investment
bank Morgan Stanley said.
Regional economies must also improve energy efficiency and cut
a heavy dependence on imported oil, the bank said in a report
received on Wednesday.
Malaysia appears best placed to benefit from rising oil prices
after consistently remaining a net oil exporter, but fuel
subsidies are eating up gains, the bank said.
The country has improved energy efficiency and moved away from
a heavy reliance on oil, while its investments in exploration and
production activities have boosted oil exports.
"(But) in our view, fuel subsidies in Malaysia offset the
positive effects of the oil trade surplus, as oil wealth is
frittered away without much economic achievement," the bank said.
"Malaysia operates an extensive subsidy mechanism. Fuel
subsidies are more far-reaching than is generally thought."
For Indonesia, the bank highlighted the need for Jakarta to
substantially increase investments in oil exploration as current
production is sourced mainly from its aging fields.
"Although the country's eastern region contains vast
unexplored potential oil fields, they would require huge amounts
of fresh investment to explore," said the report, which only
covered Southeast Asia's five major economies.
Indonesia further needs to improve its refinery capacity as
well as build the necessary transport and logistics
infrastructure, the bank said, warning the country runs the risk
of becoming a permanent net oil importer.
Jakarta last month took a bold step to substantially slash
fuel subsidies which have been straining the government budget.
The Philippines needs to diversify its energy-mix, the bank
said.
Unlike its Southeast Asian neighbors, Manila's problem is its
"significant dependence on imported oil amid inadequate domestic
production and the resulting energy imbalance," it said.
Thailand's oil dependency is "more structural than efficiency-
related", a situation that limits the government's response to
cushion the impact of higher oil prices.
But the government has taken the right moves by removing fuel
subsidies, and improving public transport, the bank noted.
Singapore's vulnerability to oil shocks is "exaggerated
because oil bunkering trade is counted as domestic consumption
and refined oil exports to Indonesia are not properly captured,"
the bank said.
It pointed out that Singapore is a major global bunkering port
-- it sells fuel to ships on anchor here.
Morgan Stanley said Singapore is an "efficient oil user", with
oil consumption as a percentage of gross domestic product
estimated at 4.0-5.5 percent this year -- the same range as Hong
Kong and Taiwan.