THE ROLE OF NATURAL GAS PRICE ON MANUFACTURING SECTOR IN MALAYSIA
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Date
2020
Journal Title
Journal ISSN
Volume Title
Publisher
Solid State Technology Volume: 63 Issue: 4
Abstract
This study focused on how the price of natural gas influences the Gross Domestic
Product (GDP) in manufacturing sectors and subsectors as the relationship remains ambiguous
given the influence of heterogeneity across diverse sectors. This study investigates the key
subsectors in economic that are highly contribute to Malaysia’s GDP. Specifically, this study
employed ARDL estimates on yearly time series data between 1987 and 2019. The empirical
findings concluded that there is a inversed relationship between natural gas price with
manufacturing’s output. The empirical results revealed a negative long-run and short-run
relationship between prices of natural gas on all manufacturing subsectors and the magnitude of
respond depended on the level of energy intensity across subsectors. Policy recommendation
highlighted the need to replace both oil and gas as production inputs with renewable energy
sources of large scale, such as biodiesel, solar, hydroelectric, and nuclear for the manufacturing
sector in Malaysia to circumvent the adverse effects of fluctuating global oil and gas prices on
the country’s economy. Adding to that, it is also recommended to diversify the economic sectors
from energy-intensive sector to lower energy-intensive sector like services sector.
Description
Keywords
Gross Domestic Products (GDP), Natural Gas Price, Manufacturing Sector, Output