The Slump in the Price of Crude Oil: A Call to Review Malaysian Revenue Law and Fiscal Policies

Global oil prices have fallen sharply, leading to significant revenue shortfalls in many energy exporting nations. It should be recalled that from 2010 until mid-2014, world oil prices had been fairly stable, at around US$110 a barrel. But since June last year, prices have more than halved. Stakeholders question the reason for the dip in oil prices. This paper looks at the potential long term solutions in a climate of persisting lower oil prices. The objectives of this paper are, first, to draw attention to the implications of the plunging oil prices in the way that it affects Malaysia, second, to show how Malaysia’s reliance on oil exports could become a drag on its economy and third, to analyse the implication and impact of lesser oil revenues on the economy which policy makers should address with a particular focus on the remedial measures potentially available to them through appropriate legal mechanisms, particularly tapping alternative sources of revenue. The methodology includes an examination of the laws and policies relating to income and expenditures and a consideration of mechanisms employed by other countries in raising revenue which are of relevance to Malaysia.