00:00First off, has the Iran war impacted investment interest in Malaysia?
00:06Well, thank you, Haslinda.
00:08We have been engaging the foreign investors and as well as the domestic investors
00:12after the impact of war in Iran.
00:16For now, people are watching closely the development.
00:21I must say that there's no announcements or decisions made to stop or halt investment into the country.
00:27But definitely, there are those who are now waiting to see the full impact of the war.
00:35Might we see a rotation in terms of, you know, from the West to the East,
00:40including in Malaysia, as investors want to diversify their investments?
00:47Yeah, well, if you remember COVID, Haslinda, we're talking about supply chain resiliency,
00:53we're talking about supply chain security.
00:54Today, people are talking about energy security.
00:56So, when we engage investors, they are talking about, you know,
00:59how important energy security is going to be.
01:03And Malaysia, in fact, ASEAN, we need to double down on the security of energy.
01:07Of course, on power, Malaysia is fortunate to have, you know, reliable power.
01:13And even ASEAN, you know, with the development of ASEAN Power Grid, for example,
01:16those are good, positive developments.
01:18But at the same time, when we talk to investors, they are really, you know, re-looking at their asset
01:24allocation.
01:26I'm talking about, especially when it comes to FDI.
01:29And I think, you know, well, we know there's a crisis, but there are also opportunities where Malaysia can position
01:35itself
01:35as a country where, you know, looking at stability of policy, consistency of policy and our track record will be
01:46a positive for Malaysia
01:48if, you know, execution is done well.
01:51Might you see another record investment year for 2026?
01:56You saw a record year in 25 to the tune of 426.7 billion Malaysian Ringgit.
02:02Might you exceed that?
02:03Might you see another record high this year?
02:07Well, last year was the proof of investment.
02:09Yes, you're right, Haslinda.
02:10It crossed the 100 billion US dollar mark in terms of proof of investment.
02:14This year, still too early to say.
02:16Like I said, you know, I'm here in Hong Kong to meet a few of our investors as well.
02:20It really depends on how the situation in the Middle East develops.
02:26Because at the end of the day, there will be demand shock as well.
02:30And this will definitely determine the kind of investments that investors will make.
02:35Because you don't want, they don't want to invest if it's not commercially viable in the short term.
02:42But in terms of industries and sectors, which are the most impacted
02:46and which are the ones that can withstand the shock from the Iran war?
02:53Well, it's funny you ask that question.
02:55We just did the analysis.
02:56Actually, it cuts across all sectors in this time, you know,
02:59because, as you know, the economy is so integrated.
03:03And when you look at supply chain for any products, be it semiconductor, pharmaceutical, aerospace,
03:11all are linked to energy.
03:14So I don't think any sectors are spared.
03:17We are bracing ourselves for ensuring that, you know, government,
03:23especially Malaysian government, can support some of these industries.
03:26We still have fiscal space.
03:27I'll bet, you know, people are wondering how long this crisis will be.
03:32It all depends on the outcome of the negotiations between Iran and the U.S.
03:40Zafrul, you touched on energy from the get-go.
03:43I'm just wondering whether this energy crisis would perhaps push a shift towards renewables.
03:49Are you seeing that?
03:50Might that be accelerated?
03:54Well, I think it has to.
03:56It taught many companies the importance of diversification, not relying on too much, on just one source of energy.
04:05But at the same time, I think we need to ensure that when it comes to energy,
04:10it has to be energy that is not just sustainable but also affordable.
04:15So this is the challenge that most companies are facing.
04:18And of course, government are ensuring that the right incentives, the right policies
04:23to encourage more usage of renewable energy.
04:28But to answer your question, Hasselinda, definitely people are looking at this.
04:32But at the end of the day, whether that cost is transferable to consumers is another issue.
04:39And back in March, you were named the senior political advisor for Prime Minister Anwar Ibrahim.
04:44When it comes to Malaysia, a key issue is actually fuel subsidies.
04:48How long do you think the fuel subsidies can continue if oil prices remain elevated?
04:56Well, fortunately, we came into this crisis when economic fundamentals are strong.
05:02GDP growth has recorded a 5.2% last year.
05:05Inflation is low.
05:06Unemployment is low.
05:07However, if you look at the kind of subsidies that are required, it has increased considerably.
05:14It used to be RM700 million a month when it comes to fuel subsidies for RON95.
05:19It's gone up to 4.
05:20And now, most recently, based on the current oil price, it's gone up to even RM7 billion a month.
05:26Definitely our budget, we look at our fiscal deficit, is now near the pre-COVID level at 3.7%.
05:32So we do have fiscal space.
05:33You know, we've reduced fiscal deficit four years in a row to reach where we are today.
05:38There is, but the question is, you know, when and how do we use that?
05:42We need to make sure that the scenario analysis, the stress tests that are done by the Malaysian Economic Action
05:46Council and what are the trigger points.
05:48But that's going to be key because we don't know how long this crisis will last because the longer it
05:54lasts, I think, the more strenuous it is on our fiscal position.
05:59A RON95 currently, 199 ringgit, is really, really cheap.
06:02And what oil price would force you to raise the price of RON95?
06:07Well, again, it's the time, right?
06:10You have to be right, 199 is very, very cheap.
06:12I think that's probably 50 US cents per liter.
06:15The government has, you know, focused on reducing that dependency from 300 liters to now 200 liters.
06:22And, you know, diesel has been floated, the price.
06:25And, you know, in fact, a lot of savings when we started this targeted subsidy.
06:30But to answer your question, I don't have the figures with me, but definitely depends on the price of oil
06:36and how long this crisis will last.
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