Pua: Pakatan will tackle oil revenue in Putrajaya

Pakatan's top priorities in Putrajaya is capping Petronas' contributions and better managing operational expenditure.

KUALA LUMPUR: Petronas will be among Pakatan Rakyat’s top priorities should the opposition coalition take over Putrajaya in the upcoming general election.

Petaling Jaya Utara MP, Tony Pua, told a recent forum that the depletion of Petronas’ earnings by the government was very troubling particularly as the bulk of it is spent on exorbitant operational expenses instead of on reinvestments.

“International oil companies usually retain 60% of their profits and give out 40% as dividends to their shareholders,” he said during a talk on “Economic Transformation: For Better or Worse?”

“In Malaysia last years’ retained pre-investment profits were only 11.8%. The rest was sucked up by the government.”

Pua pointed out that Petronas was obligated to pay an annual RM30 billion in dividends to the government regardless of how the year fared. Petronas was consistent in fulfilling this obligation last year even when plummeting global oil prices pushed its profits lower.

“This is a problem because oil money is lottery money,” Pua stated. “It has nothing to do with whether we’re productive as a nation or efficient as a country.”

“And yet every single sen we collect from oil money is spent almost completely on the government’s operational expenses.”

Pua then pulled up a chart displaying the rising operational expenditure over the years. The numbers had more than doubled from RM68.7 billion in 2004 to RM180.2 billion this year.

The government’s overspending had also tripled from 3.4% to 10.7% in the same period. The biggest increase was seen in emolument and pension which rose from RM20 billion in 2000 to RM64 billion in 2012. This portion eats up 35% of the entire operation budget.

“If you’re a businessman and looking at this sort of operating expenditure you had better make sure that your company is making hefty profits every year,” Pua said.

“Operating expenditure is the single most challenging problem that we have to resolve if we take over Putrajaya. Much of our surplus revenue comes from oil but we burn it without any saving for a rainy day.”

Pakatan’s strategy

A certain proportion of oil revenue goes to the Kumpulan Wang Amanah Negara (KWAN) which was started in the 1980s.

But according to Pua the amount deposited into the fund annually as remained unchanged at RM100 million despite the government raking in approximately RM70 billion from Petronas today.

“Oil money – if it is used at all – should be used for investment purposes because it cannot be reproduced,” he stated.

“It has to be invested to boost the country’s productivity so that when the supply eventually runs out our earnings are able to replace that lost income.”

When asked by a participant of Pakatan’s strategy for addressing the situation, Pua replied that the intial step would be to cap Petronas’ contributions and better manage the country’s operational expenditures.

“This is the most important thing for us to deal with because of the many leakages in our operating and development expenditure,” he explained. “We need to gradually lessen our reliance on oil and gas but not by imposing heavier taxes.”

“We’ll invest in permitted expenditures for oil and gas revenue like renewable energy, training and education. This portion of revenue will be put into a separate account and used only for investments, and not for buying better furniture or refurbishing offices.