Foreign media saying about Malaysia
Malaysia’s cash cow posting lower profits
by LESLIE LOPEZ
26 June 2009
KUALA LUMPUR: Malaysia’s national oil corporation has suffered a nearly 14 per cent decline in profits due to lower global oil prices and high production costs.
Petroliam Nasional ( Petronas) reported a net profit of RM52 billion (S$21 billion) for the financial year ending March 2009, down from RM61 billion in the previous period. Revenues rose to RM264.2 billion, up from RM223.1 billion in the previous year.
However, Petronas’ role as the chief cash cow for the Malaysian government is on a sharp uptrend that is worrying to private economists.
When releasing its results yesterday, Petronas CEO Hassan Marican also revealed that the firm has paid RM471 billion to the government in royalties, dividends, taxes and export duties.. Of this amount, Petronas officials say RM268 billion, or roughly 57 per cent, was paid during the last five years, a period coinciding with the administration of former premier Abdullah Badawi.
With a population of about 27 million people, the payout to the government over the last five years roughly translates to each Malaysian man, woman and child receiving RM10 million from the proceeds of the nation’s oil wealth.
Petronas said yesterday that payments to the government of roughly RM73 billion last year accounted for 44 per cent of the Malaysian government’s total revenue.. It is expected to contribute the same amount this year.
Petronas again rejects Najib’s bid to put aide on board
by Leslie Lopez, Senior Regional Correspondent
26 June 2009
Board says it will be sending a delegation to brief the Prime Minister on the matter
KUALA LUMPUR: Board members of Petroliam Nasional ( Petronas) stood their ground this week and have politely turned down a bid by Prime Minister Najib Razak to admit a key political aide as a director of the national oil corporation.
Government officials close to the situation told The Straits Times that the board in a meeting on Wednesday had reaffirmed its decision a month previous not to admit Mr Omar Mustapha as a director because he had defaulted on his scholarship loan agreement with Petronas two decades earlier.
The board, which was directed by Datuk Seri Najib to reconsider its decision last month over Mr Omar’s proposed appointment, also decided it would send a delegation to brief the Prime Minister on the matter in the coming days.
Government officials familiar with the situation said the delegation would be headed by senior lawyers and a Petronas director, Mr Abdul Kadir Kassim.
‘I don’t think it is about his close ties to the PM. It has more to do with the scholarship issue,’ said a senior government official, adding that Petronas took a firm view against scholarship defaulters.
Mr Omar, 38, did not complete the required number of years of service with the oil corporation or a related government agency as stipulated in his scholarship agreement.
Petronas initiated legal proceedings against him in 2001.
Tan Sri Hassan Marican, Petronas chief executive and president, declined to comment on the issue when asked by reporters yesterday about possible changes to the board.
Government officials say that the Petronas board has briefed the company’s influential adviser, former premier Mahathir Mohamad, of its decision to reject the proposed appointment of Mr Omar.
Tun Dr Mahathir had on Monday voiced reservations about Mr Najib’s plan to appoint his aide to the board of Petronas, Malaysia’s sole entry in the Fortune 500 list of the world’s most profitable companies.
While acknowledging that it was Mr Najib’s prerogative as premier to ‘appoint a man who failed to honour his obligation to Petronas when he was given a scholarship by it’, Dr Mahathir said in a written response to this newspaper that ‘generally I would say that it is not a good thing to appoint such a person’.
Petronas has established itself as an international energy player over the last two decades, and many industry experts and economists credit that transformation to the government’s hands-off approach in the running of the oil corporation.
That is why Mr Najib’s bid to appoint Mr Omar to the board raised eyebrows.
Mr Omar has emerged as one of the closest political confidants to Mr Najib and is often tapped for advice on economic and financial matters.
He graduated from Oxford on a scholarship from Petronas and worked briefly with the national oil corporation and another government-linked corporation. He then joined McKinsey & Co, working for the international consulting company in London and Malaysia.
He left McKinsey in early 2002 to set up his own consultancy firm, called Ethos, with several close friends and two years later was tapped by Mr Najib, who was then deputy prime minister, to become his special officer.
‘I don’t think it is about his close ties to the PM. It has more to do with the scholarship issue.’
A senior government official, referring to Petronas’ decision not to admit Mr Omar to the board
Board defers request to appoint Najib aide
26 June 2009
by Business Times Singapore
THE board of Petroliam Nasional, or Petronas, has deferred a request to appoint Omar Mustapha, a key aide of Prime Minister Najib Razak, to the board of the national oil corporation.
According to oil industry officials, the decision to defer Mr Omar’s candidacy was made on Wednesday after the board met to approve the oil firm’s financial results for the year.
The officials said that the board wanted to personally explain its position to Mr Najib who had made the request in the first place.
Previously the board had rebuffed Mr Omar’s candidacy on the grounds that he had defaulted on the conditions of scholarship given to him by Petronas more than 20 years ago. Mr Omar, 38, had served in the oil firm only briefly before leaving for higher studies overseas – a move that, theoretically, left him in breach of the provisions of the scholarship.
According to an earlier news-report in The Straits Times, Mr Najib had asked the board to reconsider its position on Mr Omar’s candidacy. Given the board’s latest position on Wednesday, it appears that it remained unmoved.
The oil firm’s seemingly uncompromising position on the matter symbolises the relative independence of its board, a characteristic that has been a hallmark of Petronas since its inception since 1974, The tradition has been carried on by its current chairman and chief executive Hassan Merican.
Mr Hassan, however, declined to comment on the matter when asked during a media briefing on the oil firm’s financial results.
The initial reports that Mr Omar, one of the premier’s key advisers on economics and finance, was to be appointed to Petronas’s board first appeared in several prominent blogs and was harshly criticised by various commentators.
Even former prime minister Mahathir Mohamad, who is an adviser to Petronas, got into the act when he criticised the possibility of Mr Omar’s joining the board saying it wasn’t a good idea to have political appointees on Petronas’s board because they ‘might have a different agenda’.
Mr Omar, an Oxford-trained economist, worked in Petronas briefly before joining McKinsey and Company where he served in London and Kuala Lumpur. He then founded Ethos, a consultancy company in Kuala Lumpur, before joining Mr Najib as a special assistant.
When the news first surfaced on the blogs, it was speculated that Mr Omar was being groomed for Mr Hassan’s job because the succession plans for Petronas remain unclear.
Mr Hassan’s contract expires in February and, according to market speculation, he could be replaced as the oil firm’s chief executive but would retain his chairmanship. But given his deft management of Malaysia’s most profitable company, his would be a very hard act to follow.
Petronas profit dips 14% to RM52.5b
26 June 2009
by Business Times Singapore
Dividend to be paid to federal govt rises 25%, despite fall in earnings
MALAYSIA’S national oil corporation Petroliam Nasional, or Petronas, registered a 13.9 per cent decline in net profit to RM52.5 billion (S$21.7 billion) for the year to March 31, 2009 on the back of RM264.2 billion in sales largely due to lower global prices for oil and high operating costs.
‘It’s been a hugely challenging year,’ Petronas chief executive Hassan Merican told reporters yesterday. ‘The industry has moved from a ‘high price-high cost’ environment to one that is ‘low price-high cost’ and it has tested the resilience of all its players.’
Despite the lower bottom line, however, Petronas declared a RM30 billion dividend to the federal government, 25 per cent higher than the previous year. Indeed, total payments to the government – including royalties, taxes and dividends – rose 20 per cent to RM74 billion.
The heroic figures illustrate the disproportionate importance of Petronas on government revenues and the economy at large. By its own calculations Petronas’s payments contributed 45 per cent of the federal government’s revenues in 2008.
Indeed, much of the oil firm’s fees to the government seemed to have come during the tenure of former prime minister Abdullah Ahmad Badawi. Between 2003 and 2008, Petronas contributed RM268 billion to Kuala Lumpur, or 57 per cent of whatever the oil firm paid the government since its inception 35 years ago..
All that money given back to the government also works against the oil firm as it reinvested only 21 per cent of its profits during its financial year – significantly lower than the average 57 per cent for the oil majors and the 72 per cent that other national oil corporations ploughed back into the industry.
Pressed on whether he was under pressure from the government to continue delivering high dividends to plug Kuala Lumpur’s budget deficit, Mr Hassan replied that he was under ‘no pressure at all’ and clarified that there had been times ‘especially in the 1990s’ when the government allowed the firm to reinvest locally and abroad in a big way.
But he also conceded that the firm would be in a ‘better position of comfort’ if it could reinvest up to 35 per cent of its profits.
There is no doubt that it has been reinvestment, especially overseas, that has enabled Petronas to become a major global player and Malaysia’s only Fortune 500 company.
During the period under review, the firm’s international operations contributed 42 per cent of revenue. A further 37 per cent came from exports while only 21 per cent came from domestic operations.
Reinvestment of the firm’s profits has also boosted its oil reserves. During the period under review, Petronas boosted its reserves marginally to 20.18 billion barrels of oil equivalent with new finds in increasingly complex geological areas: almost 15 per cent of reserves exist in very deep waters. Meanwhile, the firm’s international reserves rose almost 10 per cent to 6.84 billion barrels of oil equivalent.
Mr Hassan said he did not expect oil prices, currently close to US$70 a barrel, to improve any time soon. ‘The fundamentals do not justify the prospect of high prices,’ he said. ‘The demand is down and spare capacity has increased. My own opinion is that the current prices are due to speculative trading and the depreciation of the US dollar.’
Malaysia’s Anwar: Ready to be jailed for sodomy
25 June 2009
by Associated Press Newswires
KUALA LUMPUR, Malaysia (AP) – Malaysian opposition leader Anwar Ibrahim said Thursday he is prepared to be jailed for sodomy in a trial next month, but warned his conviction could unleash a groundswell of public support to rout the government in the next elections.
Anwar denies the charge and said he does not expect a fair trial. It’s the second time in his political career that he has been charged with sodomy. Both cases have been politically motivated to stop him from challenging the people in power, he said.
But just like the first case, “there will be a huge outcry here and internationally,” Anwar told The Associated Press.
“The worst-case scenario for me personally would be great for the opposition and the worst-case scenario for the government” in the next elections in 2013, he said.
Anwar, 61, was charged last August with sodomizing a 23-year-old male former aide, Saiful Bukhari Azlan. Sodomy, a crime in this Muslim-majority country, is punishable by up to 20 years in jail even if it is consensual.
The trial starts July 8 and is seen as a test of credibility for Malaysia’s judiciary, which has been tainted by allegations that many judges are corrupt and easily influenced by the government. The trial will also reflect on new Prime Minister Najib Razak’s promises to create a more open and free society.
“My chances, given a free fair trial, are 100 percent, but under the current circumstances the chances go down fast,” Anwar said. “Nobody likes to go to jail, but I will do it if forced to … and hopefully (come) out like a hero.”
He said a government hospital’s July 13 medical report of a rectal examination of Saiful found no evidence of anal penetration. He also claimed that his defense team has evidence to show that he was framed and that Saiful has become exceedingly wealthy in recent months. He implied Saiful was bribed by the government.
The government denies it is persecuting Anwar, and says it has nothing to do with what it describes as a personal case between two individuals.
Anwar, a former deputy prime minister, spent six years in prison after being convicted of corruption and sodomy following his ouster from the Cabinet in 1998. His arrest led to weeks of massive anti-government protests, and support for the ruling National Front coalition fell drastically in general elections the following year, even though it returned to power.
After emerging from jail in 2004 when the sodomy conviction was overturned, Anwar formed an unusual three-party opposition alliance that won more than one-third of Parliament seats in the 2008 elections.
It was the first time Malaysia’s opposition parties had formed an alliance cutting across racial lines. Anwar brought them together by tapping into the anti-government resentment not only among the minority Chinese and Indians but also the majority Malays.
Anwar said his alliance will surely win the next elections, due in 2013, if he goes to jail.
“If (Prime Minister) Najib pursues this, he is making a big blunder. It will continue to haunt him for the rest of his life,” he said. “They can control the judiciary, the media, the police but they cannot control public opinion.”
Still, Anwar said, the alliance has taken into account the possibility of him going to jail, which would bar him from contesting elections for five years after he has served his sentence.
The three parties are holding “elaborate sessions” on who would lead the alliance into next elections, Anwar said.
“This time, we are prepared for everything,” he said.