There’s an increasing concern about the high cost of Lng Malaysia. The price of oil is a key factor in the expense of living of Malaysia. As the country relies heavily on petroleum products and crude oil exports, the high cost of petroleum products and crude oil imports is felt by the Malaysian market daily. The high cost of Lng gas in particular is affecting the national transport sector. Many small and medium scale businesses are losing opportunities to tap into the Lng gas market as prices are soaring up because of the oversupply of the commodity lately.
The increasing cost of Lng gas is having an adverse effect on the competitiveness of the domestic energy industry. Domestic gas demand will deplete over time due to the rising price of Lng. Industry players are searching for ways to reduce the cost of production. Over the last few years, the Government has produced a number of changes to how Lng is generated, which have helped to improve competitiveness and minimize the expense of Lng.
The Government’s efforts to market Lng production in Malaysia have led in several tax incentives for domestic production of Lng. Along with tax rebates, State Governments has also offered various incentives to Lng industry as a means of promoting competition. These incentives cover research and development costs, infrastructure development costs and the cost of maintaining a standard of manufacturing. Some of these rebates and incentives include the first point published in 2021, the expansion of the current generation tax rate and the granting of a 20 percent share of the whole price of Lng development to all stakeholders.
Given the cost of lng in Malaysian market, it’s expected that the expense of lng in global market would also go up. This might result in the movement of Lng railroad cargo from Singapore into other Asian countries. If the trend continues, the cost of lng might become very high in Malaysia. In this situation, the export of Lng could become a very competitive advantage for Malaysia in the international level.
The transport of Lng by rail freight has a number of disadvantages. First, the expense of lng is high due to the increased cost of fuel. Secondly, the probability of accidents and the probability of accidents is high on the rail freight. The possibilities of a freight train accident are high on the open stretches of railway track where there are little or no rail traffic and the risk of an accident is increased in areas where the population is dense.
On the other hand, the expense of air cargo to Lng Industry in Malaysia is relatively low due to the absence of government regulation and the absence of a railroad network. Moreover, the expense of air cargo can be controlled since the cost of fuel is minimal. Moreover, air freight is fast means of transporting Lng from 1 location to another.
Due to the absence of a railroad network, the expense of transport by rail freight from and to Lng could be controlled. Air freight transport cost fluctuates from time to time in line with the fuel cost and the destinations. Hence, the price of transport by air cargo can be predicted fairly well.
Both the methods of transportation can offer the service of receiving and sending shipments to and from Lng by air or by rail. However, the cost of transportation by air cargo remains high in comparison to that of rail freight. It’s important to note that when the Lng Industries feels that the cost of transport by air freight is high, they may reduce the quantity of shipments. This could result in the loss of revenue for the Lng Industry.