Southeast Asia Economics

AP
Malaysia, Indonesia threatened by food, oil crises
Tuesday July 8, 9:32 am ET
By Vijay Joshi, Associated Press Writer

Malaysia, Indonesia say food, oil crises are 'grave threats' to world economy

KUALA LUMPUR, Malaysia (AP) -- The leaders of Malaysia and Indonesia on Tuesday called for boosting world food production and finding a permanent solution to skyrocketing oil prices, saying the twin problems have become "grave threats" to the world economy.
"We must identity the bold measures that we need to take now in order to guarantee the well-being of our economies," Malaysian Prime Minister Abdullah Ahmad Badawi told a summit of Islamic countries.

The Developing Eight summit brings together eight developing Islamic nations -- Malaysia, Indonesia, Pakistan, Iran, Bangladesh, Egypt, Nigeria and Turkey. It coincides with the Group of Eight summit under way in northern Japan.

Abdullah said the one-day D-8 summit must "come out with a clear message on the need to boost food production in the world."

He noted global food prices have risen by more than 75 percent since 2000, leaving the "world economy ... facing grave threats to its well-being."

Abdullah said a plan to stabilize the price of oil must also be developed.
"Long-term solutions must be found for stabilizing the price of oil. For example, the international community can examine how the futures market might be organized to assist in stabilizing prices," he said, without elaborating.

Although Malaysia, Indonesia, Iran and Nigeria are oil-producing countries, their economies have been hit hard by rising fuel prices. Oil prices fell by $4 a barrel on Monday, but remain at more than $140 a barrel.

Malaysia raised gasoline prices by 41 percent and diesel by 63 percent last month. The government says inflation is likely to cross 5 percent this year, which has fueled public anger.

Indonesia, the region's biggest oil producer, is also facing public unrest because of escalating food and oil costs. It said it will quit the Organization of Petroleum Exporting Countries because of declining oil reserves and investments.

Indonesia's production of roughly a million barrels a day is at its lowest level in 30 years.

Indonesian President Susilo Bambang Yudhoyono said in a speech the challenge of food and energy security has surpassed the challenge of globalization, which he said has led to the marginalization of many poor countries.

"There is no quick fix that will sweep aside this challenge, but we must act on it at once and in concert. To delay concerted action on this great challenge of our time is to court disaster," Yudhoyono said.

The "rising price of crude oil, the scramble for alternative sources of energy, and the threat of global warming" have exacerbated the food crisis, he said.

President Mahmoud Ahmadinejad of Iran, OPEC's second largest oil producer, did not address the opening of the summit.