KUCHING: The Malaysian Institute of Economic Research (MIER) has recently released a report that analyses the potential economic impact of 5G technology implementation in Sarawak’s oil and gas industry.
Its study demonstrated that the adoption of 5G technology in the oil and gas industry has the potential to revolutionise the sector, leading to automation and digital transformation.
The industry will experience a substantial impact with the introduction of 5G technology, particularly regarding factors such as Gross Domestic Product (GDP) contribution, job generation and displacement, capital expenditure (capex), and return on investment (ROI).
It is noted that the analysis examined three different investment scenarios with the potential to generate significant economic benefits for Sarawak and Malaysia.
The three investment scenarios were the conservative scenario (CS) with a USD 10 billion investment option, the moderate scenario (MS) with a USD 30 billion investment option, and the best scenario (BS) with a USD 50 billion investment option.
“The total additional GDP contributed by the oil and gas sector in Sarawak will be RM8.53 billion under the best scenario.” the report said.
Moreover, the 5G technology will generate efficient spill overs that can enhance the productivity of the oil and gas sector by reducing depreciation and economic leakages by RM11.26 billion over the next ten years.
The analysis also showed that the ROI value jumps to RM24.38 billion from RM0.59 billion when the investment option is changed from the conservative to the best scenario. Likewise, the sector will generate about 8,000 new jobs under the best scenario and a minimum of 3,000 jobs under the conservative scenario.
However, the adoption of 5G technology will also lead to job replacements during the process, whereby about 570 workers will be affected. The job disruption/replacement is inevitable as 5G technology will require new skills that are currently missing in the workers working under the current circumstances.
It is noted that Computable General Equilibrium (CGE) model predicts that the adoption of 5G technology will yield an additional RM21.49 billion, RM50.11 billion, and RM69.27 billion GDP contribution to the oil and gas sector in Sarawak, agriculture sector in Pahang and Johor, the manufacturing sector in Perak, digital healthcare sector in Melaka, and smart city in Kuala Lumpur and Selangor in the next ten years under the conservative, medium, and best investment scenarios, respectively.
The analysis further revealed that the implementation of 5G technology at the state level will yield the most GDP contribution benefits for the Oil and Gas sector in Sarawak and the Smart City sector in Kuala Lumpur and Selangor, compared to other specific sectors in the selected states.
Sarawak was one of the seven selected states, including Pahang, Johor, Perak, Melaka, Selangor, and Wilayah Persekutuan Kuala Lumpur, analysed in the study conducted by the economic think tank.
