Mitigate recession: Stop the secretive dealings in Petronas, says Jui Meng

The Najib administration must stop plagiarizing the Pakatan Rakyat's economic agenda and get cracking with tough financial reforms, starting with the uncloaking of the secrecy around national oil firm Petronas. This alone could immediately pump billions back into national coffers, reactivating the economy and helping millions of Malaysians ride through the current rough patch, economists and opposition leaders said.

"Since 1974 to 2010, Petronas reports show it has made profits totalling RM700 billion. Now, this is a joke. For Petronas to make so little money over such a long period of 36 years, it is an insult to the intelligence. Then when you compare against the WikiLeaks disclosure that Petronas is the 13th most profitable company in the world, it becomes even more impossible and you realize how mind-boggling the corruption really is," PKR vice president Chua Jui Meng told Malaysia Chronicle.

Shadowy world of oil options wheeling-and-dealing by cronies

Petronas was enacted under the Petroleum Development Act in 1974 and has been enjoying the huge rises in petroleum prices in the past decade. It made a pre-tax profit of RM90.5 billion for the year ending March 31, 2011. On top of taxes, Petronas has been paying the government a dividend of RM30 billion since 2009, up from RM24 billion in 2008, RM20 billion in 2007, RM13 billion in 2006 and just RM9.1 billion in 2005.

But there have long been whispers of huge oil options granted to firms controlled by crony tycoons close to the ruling elite in Najib's Umno party. These 'third parties' have allegedly been permitted to write sell or buy options in the global oil market, backed by Petronas's physical oil. Given the massive uptrend in oil prices in line with surging world demand, this has reaped the crony firms enormous profits that seldom ever come back to Malaysian shores.

"Of course, these sort shadowy wheeling and dealing must be probed and stopped. It is like allowing these firms to cream off Petronas' rightful profits. And this could be why the reported accumulated gains are so low. Who are these firms, who gave them these rights and above all, immediately stop such dealings because the money belongs to the people. It is the nation's wealth and already, our oil reserves are drying up," said Jui Meng.

Dropping the veil: Dr M should lead the reform but will he?

Recently, a leaked US diplomatic cable revealed Petronas officer, Mohd Azhar Osman Khairuddin, as telling embassy officials that Malaysia's oil and gas reserves were running dry. Indeed, Conoco Philips Malaysia too has confirmed that without new discoveries, Malaysian oil production will decline at approximately 10 per cent per year, from 550,000 bpd in 2008 to roughly 490,000 bpd in 2009 and 450,000 bpd in 2010.

Jui Meng and Opposition Leader Anwar Ibrahim want a Royal Commission of Inquiry into Petronas. Anwar has said the oil wealth belongs to the people and a proper and full audit must be conducted. He has called for Petronas to answer directly to Parliament for greater accountability and transparency.

Ramon Navartnam, an economist and prominent civil society leader, agrees that there should be "much greater" transparency injected into the national oil firm. He called on Petronas adviser Mahathir Mohamad, the former premier, to spearhead the move.

"Certainly by world standards, Petronas does appear to be lacking in terms of transparency in how it accounts for its profits and much should be done to improve. Tun Mahathir is the best person to lead this call for reform in Petronas. The Petroleum Development Act should be reviewed and all clauses inserted through the years to ensure secrecy should be removed," said Ramon, who is also the past president of Transparency International Malaysia.

Cutting corruption can yield faster results

Both Jui Meng and Ramon had been responding to a statement from Pemandu, an economic unit in the Prime Minister's Department, which on Friday said the federal government was taking steps to increase the average household income from about RM1,500 to RM4,000 per month.

Pemandu did not state any time line, prompting both Ramon and Jui Meng to pour scorn on the proposal. They warned that any attempt to give the people a false impression that such an economic quick-fix was possible would only backfire.

Financial analysts agreed the plan would take time, and given that the winds of global recession were fast blowing into Asia and Malaysia, quicker solutions may lie in stopping the rot in Petronas, which is already money-making, as well as serious austerity drives that focused on stamping out corruption. The problem lies in whether there is the political will to do so, they said.

"At the end of the day, it is corruption-free that is the buzzword. Look at Selangor - in 3 years it has now the highest cash reserves in its 28 years' history. Medicine that didn't work in the BN's time now work, because the Pakatan administration was sincere and did their jobs. No graft. Same in Penang," said Jui Meng.

In Buku Jingga, PKR had proposed the jump from RM1,500 to 4,000 but to be effected within 5 years. This was not a magic wand, said Jui Meng, but a specific time line requiring serious steps such as implementing a minimum wage of RM1,500-00, allowing spouses to work from home so that they could provide a second source of household income, abolishing and reducing toll, controlling water and electricity charges.

"The Pemandu statement is stolen from Pakatan' Buku Jingga, almost verbatim. There have been so many other ideas they have stolen from us to sound good and look good but although it is easily within their power to make it a reality, we don't see the Najib administration doing much. Recently, the BN finally recognized Malaysia Day and that was also from us. It was the Anwar September 16 call and his insistence that this day should not go unrecognized that made the BN U-turn," said Jui Meng.

- Malaysia Chronicle