BMI's Executive Summary

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The new Malaysia Power Report from BMI forecasts that the country will account for 1.5% of Asia/Pacific regional power generation by 2011, with an increasing generation surplus that provides a theoretical export capability of 10twh per annum. BMI's Asia/Pacific power generation estimate for 2006 is 6,167 terawatt hours (twh), representing an increase of 7% over the previous year. We are forecasting an increase in regional generation to 9,041twh by 2011, representing a rise of 46.6%.

Asia/Pacific thermal power generation in 2006 is estimated by BMI at 4,644twh, accounting for 69.9% of the total electricity supplied in the region. Our forecast for 2011 is 6,455twh, implying 39% growth that raises the market share of thermal generation to 71% – in spite of environmental concerns that should be promoting renewables, hydro–electricity and nuclear generation. Malaysia's thermal generation in 2006 is estimated at 92.7twh, or 2.0% of the regional total. By 2011, the country is expected to account for an unchanged 2.0% of thermal generation.

For Malaysia, gas is the dominant fuel, accounting for an estimated 53% of 2006 PED, followed by oil at 35%, coal at 10% and hydro with a 3.0% share of PED. Regional energy demand is forecast to reach 5,258mn toe by 2011, representing 47% growth over the period. Malaysia's estimated 2006 market share of 1.8% is set to fall to 1.5% by 2011. Malaysia's estimated 7twh of hydro demand last year is forecast to reach 10twh by 2011, with its share of the Asia/Pacific hydro market falling from 0.9% to 0.6% over the period.

Malaysia's overall business environment can be considered attractive in a regional context, aided by better–than–average scores for long–term political and economic risk. The country's weakest suit is the limited extent of progress in power market deregulation, considerable state ownership and few steps toward liberalisation. Growth in energy demand and power generation is below the regional average, as is the degree of energy import dependence, which represents the strongest area for the country. In the BMI Business Environment Ranking matrix, Malaysia receives a composite score of 29, which ranks the country third out of 11 states included in the Asia/Pacific region.

BMI is forecasting Malaysian real GDP growth averaging 5.4% per annum between 2006 and 2011, with this year's forecast at 5.5%. Population is expected to expand from 26.2mn to 28mn over the period, with GDP per capita and electricity consumption per capita both forecast to increase significantly. The country's power consumption is expected to increase from an estimated 91.8twh last year to 129.7twh by the end of the forecast period, leaving surplus generation rising from 8twh in 2006 to 10twh in 2011, assuming 6.5% annual growth in generating capacity.