MPRC: Budget 2024 Favourable for OGSE Companies; Underscores ‘Just’ Energy Transition

KUALA LUMPUR, 13 OCTOBER 2023 – Budget 2024 provides a favourable landscape for Malaysia’s oil & gas services and equipment (OGSE) companies to strengthen the industry's fundamentals and secure its sustainability.

Malaysia Petroleum Resources Corporation President/CEO, Mohd Yazid Ja’afar said, “In a resounding commitment to improve the nation's global competitiveness and empower its workforce, Budget 2024 includes significant allocations to advance Technical and Vocational Education and Training (TVET) initiatives, training, upskilling and certification as well as boost STEM enrolment.

“These initiatives will provide a vital shot in the arm for OGSE companies which rely heavily on a continuous supply of highly skilled talent but are grappling with a talent shortage, with the OGSE industry needing to maintain a skilled workforce of at least 60,000 by 2030 to ensure its sustainability.”

Mohd Yazid also commended efforts to support small and medium-sized enterprises (SMEs). According to MPRC’s OGSE100 FY2021 publication, 85%, or 2,009, of the 2,376 core OGSE companies in Malaysia are made up of SMEs. In Budget 2024, RM8 billion was allocated by Bank Negara Malaysia to support the development of SMEs, while Syarikat Jaminan Pinjaman Perniagaan’s (SJPP) financing guarantee scheme of up to RM20 billion with up to 80% government guarantee coverage for SMEs could benefit OGSE SMEs. The allocations could be utilised to expand OGSE companies’ access to financing and boost their cash flow, said Mohd Yazid.  

He also highlighted efforts to promote technology in Budget 2024, which cut across the OGSE value chain, outlining specific initiatives which were aligned with the National OGSE Industry Blueprint (OGSE Blueprint) 2021-2030. For example, the RM510 million of R&D funding allocated to the Ministry of Science, Technology and Innovation as well as Ministry of Higher Education, whereby a RM50 million matching grant will be allocated for private and public universities for research and innovation that can be commercialised, could further facilitate industry-academia collaboration as outlined in the OGSE Blueprint.

Furthermore, MPRC recognises the importance of tax incentives in driving investments and attracting OGSE companies to participate in the energy transition. The comprehensive study on tax incentives for Carbon Capture and Storage (CCS) and hydrogen, conducted under the Petroleum (Income Tax) Act 1967 could spur more investments in clean energy technologies and also encourage OGSE companies’ involvement in this space.

Finally, MPRC also lauds the substantial allocation of RM2 billion for the Energy Transition Facilitation Fund and RM200 billion Low Carbon Transition Fund (LCTF). These significant funds can help in aiding OGSE companies in their transition towards more sustainable energy practices.

“We stand firmly behind the Malaysian government's 'Just Energy Transition' agenda, which ensures no one is left behind in the race to net zero, as already highlighted by the National Energy Transition Roadmap (NETR), and look forward to unleashing new growth opportunities for the OGSE industry in 2024,” said Mohd Yazid.

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About MPRC Established in April 2011, Malaysia Petroleum Resources Corporation (MPRC) is an agency of the Ministry of Economy tasked with advancing Malaysia's Oil and Gas Services and Equipment (OGSE) sector. MPRC also provides policy recommendations to the Government in the oil, gas, and energy industry. As countries the world over, including Malaysia, embark on the energy transition, MPRC further advocates for OGSE companies to pivot towards cleaner and sustainable renewable energy as new areas for business growth.