Don’t be surprised if the price of Teh Tarik is getting more expensive, many people don’t know that the US-Iran conflict is actually starting to hit their wallets.
Talking about the conflict between Iran and the United States (US)-Israel, many of us feel like it is happening on another ‘planet’.
We feel safe because we live far away in Southeast Asia, even at gas stations there are still no long queues like during the PKP era.
However, whether we realize it or not, the impact of the war has already reached the glass of Tarik tea that we drink every morning!
Datuk Zainul Arifin, Group Chief Executive Officer, Big Boom Media in his excerpt explains that we are currently in a quite dangerous phase, if we continue to play politics without thinking about the bigger economic risks.
1. The conflict is ‘far’ but the impression is ‘close’
We must realize that Malaysia is a trading country. When there are riots in the Middle East, it’s not just TV news that happens.
Malaysia relies heavily on exports and imports.
Even though we feel ‘safe’ because there are oil subsidies that protect us from world market prices, that is not a ticket for us to be indifferent.
The impact of globalization means: when there is a ‘sneeze’, there we can have a ‘fever’
2. The Oil Issue Becomes a ‘Political Ball’
Currently, the price of petrol and diesel is the main source of debate for a number of parties. Some say, “We are oil producers, why don’t the prices fluctuate?”.
There are even those who ‘lobby’ by saying, if the government cannot reduce oil prices, it is better not to come to power.
But do you know the reality?
RON95 price: despite rising world prices, the majority of Malaysians still pay RM1.99 per liter. Diesel Assistance: The government regularly provides cash assistance to those who qualify.
The problem is, we are too busy with politics to forget the long-term impacts. If world oil prices rise, the cost of doing business will rise, and ultimately the cost of living for all of us will rise.
3. Handling the ‘Strait of Hormuz’ – The World’s Oil Pulse
You need to know that almost 40 percent of the crude oil brought to Malaysia must pass through the Strait of Hormuz.
Imagine if America put a blockade there or a refinery burned down because it was attacked?
Global supply will be greatly affected, world crude oil prices could soar to US$100 to US$120 per barrel and ship insurance and transportation (freight) costs will also skyrocket.
4. ‘Horrible’ Subsidy Bill
This is a fact that many people don’t want to hear. The government initially wanted to save RM2.5 billion this year through subsidy rationalization, but the war in Iran has ‘ruined’ those plans.
In January, when world oil prices were around US$75 per barrel, the government spent RM700 million on subsidies. But when the war started, the subsidy bill shot up from RM4 billion to RM6 billion A MONTH!
If this trend continues, the country may have to cover subsidies of up to RM72 billion annually, which is almost 17 per cent of the entire budget in the 2026 budget.
Such funds should be used for schools, hospitals and other welfare.
5. Petronas is not a ‘Luxury Bank’
Many people are accusing Petronas of making big profits from people’s suffering. In fact, Petronas has a big responsibility to the country beyond just profits and losses. They have to pay dividends, royalties and taxes to fill the state treasury.
Another thing, Petronas actually only supplies around 48 percent of domestic fuel needs. The remaining 52 percent is supplied by other companies such as Shell, BHP, Caltex and Petron.
So, it is unfair if we are only busy ‘shooting’ one side without understanding the complexity of the country’s supply system.
6. Consequences that we will immediately feel
Even if the war ended tomorrow, these economic impacts would not disappear overnight. The destroyed infrastructure took a year to rebuild. What will we face?
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Electricity Rates: May increase due to increase in generation fuel costs.
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Interest Rate (OPR): Bank Negara may have to maintain high interest rates to fight inflation.
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Lifestyle: Our wallets are getting thinner, business activity is slowing down, and the risk of losing our jobs.
In this situation, the reason we don’t even need to be staunch supporters of any political party to understand that the world is in crisis.
Sometimes, we need to ‘take a break’ from political games and see the reality.
When the government asks us to save electricity or reduce waste, we should not continue to belittle or mock.
Our small actions, such as saving 10 percent of energy, can actually save billions of ringgit of state money that can be used for our children’s future.
Datuk Zainul Arifin is the Chief Executive Officer of Big Boom Media which publishes Scoop.my
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