SEPTEMBER 7 — Malaysia should not congratulate itself too quickly. But neither should it ignore something that has become increasingly apparent during the prolonged global energy crisis: the country has so far handled the fuel shock relatively well.

The contrast with parts of Asean is becoming increasingly significant.

Prime Minister Anwar Ibrahim’s economic adviser, Nurhisham Hussein, said Malaysia’s fuel supply remains stable despite tightening global supplies. Petronas is confident that sufficient supplies can be secured through the end of the year.

More importantly, Malaysia has avoided the kind of severe physical shortages that an international energy crisis could easily have produced.

That is no small achievement.

But Nurhisham’s second observation deserves even greater attention. Oil prices may remain elevated for another two to three years. Countries that have drawn down their reserves are unlikely to rebuild them aggressively until prices return to something closer to US$80 a barrel.

In other words, this is no longer merely an energy-price spike.

It could become a prolonged period of expensive energy.

Malaysia enters this difficult environment with several advantages. It is a significant oil and gas producer, a net exporter of liquefied natural gas, possesses substantial domestic energy infrastructure and, above all, has Petronas.

The government has also chosen not to expose households completely to international price fluctuations.

The basic monthly eligibility for subsidised RON95 has been restored to 300 litres, with the subsidised price remaining RM1.99 per litre. Malaysia’s overall inflation, meanwhile, remains around two per cent.

This is an important economic buffer.

Petrol prices are not simply another item in the consumer price index.

Energy runs through almost everything: transportation, logistics, food distribution, manufacturing, aviation, fisheries and eventually the price of goods on supermarket shelves.

A government that prevents an international oil shock from immediately becoming a domestic cost-of-living shock therefore buys valuable economic and political breathing space.

Much of Asean is not quite so fortunate.

The Philippines is particularly vulnerable because of its dependence on imported energy, relatively modest buffers and rapid transmission of international energy prices into domestic costs.

Thailand is similarly exposed through its large oil and gas trade deficit. Indonesia has greater domestic energy resources but must contend with the enormous fiscal cost of shielding its population from international prices.

This is the fundamental Asean dilemma.

Governments can allow international oil prices to pass through to consumers and risk inflation, declining purchasing power and political dissatisfaction. Or they can subsidise energy heavily and transfer the shock onto government budgets.

Neither option is painless.

Indeed, fossil-fuel support across South-east Asia was estimated at US$353.1 billion in 2024 when explicit and implicit subsidies are included.

Elevated energy prices therefore represent not merely an energy-security problem but an increasingly serious fiscal challenge.

Malaysia’s relative success should consequently be understood as strategic management rather than immunity.

Kuala Lumpur still has to pay for subsidies. Businesses remain vulnerable to higher diesel, electricity, transportation and input costs.

An extended period of expensive crude could eventually work its way through supply chains regardless of government intervention.

Nor can Malaysia ignore what happens to its neighbours.

Asean is an interconnected production platform. If transportation costs rise sharply in Thailand, manufacturing costs increase in Vietnam, inflation accelerates in the Philippines or Indonesia is forced to divert billions more into energy subsidies, Malaysia will eventually feel the consequences through trade, investment and regional demand.

Energy security must therefore become an Asean issue rather than merely ten separate national problems.

The Asean Power Grid becomes even more important in this environment.

So does diversification towards renewable energy, stronger regional electricity interconnection, electric vehicles, improved public transportation and greater energy efficiency.

Interestingly, China’s rapid adoption of electric vehicles is already helping moderate global petroleum demand, according to Nurhisham.

There is a lesson here for Asean.

Energy transition should no longer be viewed exclusively through the prism of climate change. It is increasingly about strategic autonomy.

Every additional unit of electricity generated domestically from solar, hydroelectricity or other renewable sources potentially reduces exposure to distant conflicts and vulnerable maritime chokepoints.

The West Asian crisis has demonstrated brutally how geopolitical instability thousands of kilometres away can reach directly into the household budgets of South-east Asians. More than 80 per cent of the crude oil and LNG passing through the Strait of Hormuz is normally destined for Asia.

Malaysia has managed this difficult period better than might have been expected.

Stable supplies, targeted fuel support, Petronas’ international reach and relatively contained inflation have provided the country with buffers that several Asean neighbours do not possess to the same degree.

But if Nurhisham is correct that elevated oil prices could persist for another two or three years, Malaysia cannot merely congratulate itself for surviving the first stage of the crisis.

It should use the breathing space to prepare for the next one.

And Malaysia should help Asean do the same.

Energy resilience cannot stop at Malaysia’s borders. In an integrated Asean economy, Malaysia cannot remain permanently fortunate if its neighbours are increasingly unfortunate.

* Phar Kim Beng, PhD is the Professor of Asean Studies at International Islamic University of Malaysia and Director of Institute of International and Asean Studies (IINTAS).

** This is the personal opinion of the writers or publication and does not necessarily represent the views of Malay Mail.