As ordinary citizen, Dr M is asking some sensible Qs!

From The Malaysian Insider:


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Dr M: Where did Petronas money go?

Dr Mahathir wants to know what the government did with the Petronas money.

KUALA LUMPUR, July 3 — Petronas adviser Tun Dr Mahathir Mohamad today asked what did the government spend with the RM253.6 billion payment from the national oil company over the past six years when his successor Tun Abdullah Ahmad Badawi was prime minister.
The former prime minister, a trenchant critic of Abdullah, wrote in his http://chedet.co.cc/chedetblog/ weblog that Petronas has been paying dividends, taxes, royalty and export duties to the government since 1976, after it was set up as the national custodian for fossil fuels.
"Where has the money gone to?" Dr Mahathir asked.
He said Petronas began by paying RM300 million in 1976, rising to RM2 billion in 1981, when he assumed office. The total from 1981 to 2003 was RM168.8 billion for the 22 years that marked Dr Mahathir's tenure as the country's fourth prime minister.
"From then onwards it increased from RM19 billion in 2004 to RM67.8 billion in 2009. The total for six years is RM253.6 billion," he said. It is not known if the figures were adjusted for foreign exchange fluctuations as oil is usually quoted in US dollars.
"I am sure the government had spent the money wisely. It would be interesting to know what the RM253.6 billion was spent on," said Dr Mahathir, who retired as prime minister in favour of Abdullah, who stepped down in early April.
His remarks today came after a June 25 announcement by Petronas that it had paid RM30 billion in dividends to the federal government for the financial year ended March 31, 2009.
The amount was despite a 14 per cent decline in net profit to RM52.5 billion due to lower crude oil prices and higher operating costs and included a special dividend of RM6 billion which was declared in the last calendar year. Petronas paid out RM24 billion in the previous financial year.
Apart from the dividends, Petronas — the country's only Fortune 500 company — also paid RM29.4 billion taxes, RM6.2 billion royalties and RM2.2 billion export duties for the last financial year, totalling RM67.8 billion to the federal government against RM56.8 billion in the previous year.

DESIDERATA: will later add his 3sen's worth if he deems it worthwhile, Godwilling/InsyaAllah...

OK, reprising an olde post I wrote... 8/4/05 in two parts:

A PETRONAS FOUNDATION, ANYONE?

Last night, I caught up with an iron works proprietor-friend, semi-retired as he has passed the baton to his eldest son, and our conversation turned to the state of te country’s economy. Not only he was complaining of difficulty of advancing his business, he conveyed the news that many of his business associates reported that “things are slowing down” a lot the past six months. This recalls for Desiderata another work colleague who runs a financial portal (klsetracker.com) who just returned from a business trip from up north. Even to close one contract o about RM20,000 with a listed company who definitely has need for his company’s data and information-based services, it was so difficult to progress the deal after several rounds of meetings. Further bad news reported by this mGf who constantly updates me on business and economy matters, said a large company in Ipoh had just retrenched one-third of its workforce. “I’m afraid to report the forecast for the economy is not good. It appears we are heading for a downturn worse off than the 1997/98 financial crisis.” I don’t want to sound “alarmist”, but has the Government been adopting the right economic measures to meet a fast globalising world? It’s sad, and alarming, to witness the recent PWTC stage crowded for a few days with UMNO politicians pushing issues of the 1970s and 80s, and 90s – and self-serving interests. How then do outsiders like me watching the acts on stage of delegates proposing that the APs be handed out to each UMNO division, plucking out from the present “concentrated in a few hands” to political branches. How do you reconcile TWO WRONGS -- does it ake it any RIGHT? How do the rest of Malaysians watching as spectators have any confidence when the so-called domiant party of the ruling coalition that It’s Okay to continue the acts of Robber-Baronry, moving rent-collection from some tycoons’ coffers to pmore politicians’ pockets? Are they totalling blind or deaf to the cries of helplessness and laments of the common folks outof the Great Hall? I don’t have confidence when there was hardly mention of any speakers touching on the effects of globalization, how it affects the nation’s automotive policy; of the threats from new giants like China and India,or even the removal of the Ringgit-USD peg, and also the Chinese yuan-USD peg at the same time. With these ill-informed actors on the PWTC stage seeing no further than their two-inch noses and the AP dollars, an NEP or re-defined one spells doom for a country now caught up with challenging times and external forces, but the majority of politicians' eyes are still focused around Putrajaya. Nobody debated the continuing consumer goods'-price-in tandem with-petrol price increases – two rounds preceding the UMNO General Assembly – how the poor hawkers, rubber tappers or small-and-medium enterprises are hit badly, again and again, and the lower end market consumers, which must mean about 90 per cent of the public. (We can forget the upper market consumers who can afford to take annual family holidays overseas, but the trouble is that likely this segment of people are also pulling a lot of puppet strings of the power-brokers present on the PWTC stage.) Back to mGf the iron works contractor – he wondered aloud how those rural folks are able to cope with each round of price increases that never fail to follow every petrol price increase. Yes, now the lorry and bus transport operators are already shouting for price adjustments upwards – so what Voice has the depressed PublicJoe? MGf recalled seeing pitiful pictures carried in the media, especially from Sabah and Sarawak, showing schoolchildren braving the rickety bridges to reach school, every day risking their young lives. Does any of the politicians care? Yes, Pak Lah does, I read daily of his assurances, but does his exhortations translate into actionable programmes? MGF suggest maybe PETRONAS – the national oil corporation – can do more. One idea which he proposed – and Desiderata has similarly written via this Blog – is that it should be behaving as a trust organisation holding the national resource in trust on the Rakyat’s behalf, and using the riches and benefits accruing to really help the ordinary man-in-the-kampong and village. It’s what I have been shouting here: THINK NEEDS, NOT RACE. Maybe Petronas need not think of raising its oil subsidies. It can set up a PETRONAS FOUNDATION to do real, meaningful philantrophy. Amazing Grace The richest man in the world, BILL GATES, And his wife, have set up a Gates Foundation through which they plough back BILLIONS of the company’s earnings to help the peoples throughout the global village. That’s what is called CORPORATE RESPONSIBILITY. In the last financial year ended March 2005, Petronas reported an after-tax profit of RM35.5BILLION. How about for a start, take out 10 percent – ie. RM3.55BILLION - to kickstart the Petronas Foundation? Emulating the once-functioning Sabah Foundation, the Petronas Foundation can give out an annual dividend of RM2,000 to “poor” households – perhaps, those earning less than RM1,00 per month with one or two breadwinners? – and raising it to RM3,000 for those with less than RM700 per month, and RM4,000 for those earning less than RM500 per month? Even the Government civil servants whose take-home salary is less than RM1,000 per months should be similarly entitled, this in the form of an annual bonus on top of the normal bonus declared occasionally. Adopting this modus operandi, the nation’s oil resources are used to help those the maimum who need it most, and in a declining scale those slightly better off, with no financial assistance to those who are “deemed to have arrived” in the Malaysian society. (This is broadly defined as those whose earnings per month exceed RM5,000 who can afford an annual local holiday; well, for those eraing RM10,000 and above, they can take care of themselves…) Let’s not squander our nation’s resources creating BILLIONAIRES or INSTANT MILLIONAIRES. (Digresssing a little, an "instant billionaire" of the 1997/98 era who got into trouble is now aspiring to become a second echelon leader in one major BN component party -- no prize for guessing right! I mention this because Desi suffers more than just PWTC stage fright!):( The trouble our economy is in danger is because many of these ill-gotten Billions have found their way to Swiss bank unnumbered accounts. It’s only my guess, an educated guess.If only these Billions could be circulated within the country, then there won't be this malaise befalling the roadside hawker, and the average businessmen trying hard to earn an honest living -- through blood, sweat and tears, not via rent-collection! One proposal to the government which it should immediately implement is to do away with the divisive highly practice of DIFFERENTIATED HOUSE PRICING. Why do you still need to offer 6-15 per cent discounts to people – Bumiputera or non-Bumiputeara who can afford to buy houses above RM150,000? Surely if you can buy a RM300,000 bungalow, you should NOT receive any financial advantage anymore, because you are DEEMED TO HAVE MADE IT, fellow Malaysians? And that’s a rhetorical question – because I had at an earlier occasuion received a rebuttal that as his pay is only RM10,000 a month, he should still receive that 10per cent discount. To go to the United States or Europe for a vacation? Hey, there are some Malaysian brother snd sisters out there in the kampong or village just living on RM500 a month, sacrificing electrity for oil lamps, or even their children’s schooling so the child can controibute an extra RM3 a day to put food on the table. It’s better to plough back these “discounted” amounts to subsidise low-cost or free housing. Regardless of race, creed, gender or region. Remember, Malaysia does not comprise Peninsular Malaysia alone, there’s Sabah and Sarawak too! Malaysia has been described as a "Lucky Country" -- blessed with many valuable natural resources, with new petroleum discoveries buffering many of the nation's economic downturns. But we must also utilise these resources properly and meaningly. Pak Lah may not want to iuncrease the oil subsidies, but how do you expect transport opearors not to raise prices when the pum prices are raised so often -- three times within the last 12 months! Who is there to lend the less well-off, now already struggling to get three square meals a day -- to cope with the inevitable price inflation. Yes, by GOD'sGRACE, we are truly blessed. But do we have gracefully responsible stewardship of the nation's riches? That's the question -- to be accountable, or not to be, THat's not just Pak Lah's dilemma. It is every responsible Malaysian's dilemma. PS: As I write this, I keep listening to THE AMAZING GRACE to keep my ranting in low keys, and low decibels, and of course, the spirits up, despite the haze and the kopi-o which just went up by another 10sen this morning at the central market. Anyone supporting Desi with this suggestion to Petronas to initiate a Truly Malaysian Charity Act at our own doorstep to benefit All Malaysians in need, regardless of race, gender and creed?


A PETRONAS FOUNDATION

As I said yesterday in my Comments, especially to TIGER’S input, I feel it’s proper to continue the discussion today as several new areas pertaining to PETRONAS were opened up, some as major points, which would be pursued in greater detail today, others in passing, and would be thus passed over as “digressing”, a habit wont of this blogger (a luxury of blogger, he says), and yet others Desiderata would like to ponder over in the longer term as one can’t have too many dishes at one go. I hope Readers would bear with me. Henceforth I would, with gratitude, start by reprising TIGER’S comments yesterday as IT IS (in situ, the economic term, if I’m not wrong.). TIGER said: “People, the PETRONAS substituting for Welfare Dept theory crops up every now and then. I just want to point out a few things, the most important being that when you read / hear about petrol subsidies in the media, this is how the scheme works: All fuel retailers in Malaysia (inc. Shell, BP, Esso, Mobil, etc.) sell petrol, diesel and LPG at prices fixed by the Govt, since these products are control items. However, the price of crude oil is subject to market forces, and as any economics student will tell you, buying raw materials at market price and selling the end product at a fixed lower price is not economically feasible. This is where the petrol subsidy comes in. All fuel retailers in Malaysia claim a subsidy from the Govt, which is essentially the difference between revenue from petrol / diesel sales and cost of crude oil purchased to produce the amount of petrol / diesel sold. The subsidies paid by our Govt is not a full reimbursement, but it helps to mitigate losses when crude prices are high. However, as the gap between crude and petrol prices widen, the subsidies claimed by fuel retailers will grow larger. Thus, at some stage, some of the price gap will be passed down to the consumer. Points to note: 1) The petroleum refining business has been making losses across the board for the past several years. Refining is the link between crude oil and petrol / diesel. Google it, and read for yourselves. 2) Anyone who thinks PETRONAS should "do more" must firstly find out who bankrolls Tabung Amanah Negara, Syarikat Perumahan Negara, Kuala Lumpur Medical Centre (soon to be opened), TNB and a whole bunch of IPPs (by not collecting monies owing for supply of gas, or selling gas below market price). 3) Anybody else who looks at PETRONAS as some sort of Santa Claus should also ask who kept Proton and Malaysia Airlines alive in the late 90s and in the first couple of years of this millenium; who paid the salaries of all civil servants during the economic drama of 1997-98; and who helped Bank Negara fight currency traders back when the RM went past 4.00 and was about to hit 5.00 per USD. 4) All other doubters should also find out which organisation creates 100,000 jobs outside the petroleum industry, keeps the KLSE afloat when there are signs of "hot money" making moves; and ensures continuous job creation in the industry by obliging other oil companies and their affiliates to engage Malaysian employees and contractors when operating in Malaysia. Coincidentally, PETRONAS' credit rating is acknowledged by global institutions to be of sovereign status, i.e. Malaysia's credit rating in the eyes of the World Bank depends on how well PETRONAS is doing. I think PETRONAS has done quite a bit for all Malaysians, and we should all evolve ourselves beyond the stereotyped welfare-case mindset. cheers" (end of Tiger's comments) Before I proceed with my initial response, with some diversions to quoting other sources, to ensure a smooth, perhaps, more coordinated, discussion here (at leisure, as I assured dear TIGER yesterday), Desi would like to perform some niceties the Malaysian way, first -- thanking Tiger for finding the time, with his informative input that surely steers the discussion via Desi's Place with some focus. We, especially this Blogger, benefit from several insights into the petroleum industry, and the roles Petronas played /continues to play in certain national businesses. As a journalist, I always like to treasure such sources (attributable, authoritative .. especially volunteered), I’m sure Tiger will come back to "share" his views again at "leisure" ... after this Post is uploaded. So, just recalling that Desiderata, in answering the points outlined by TIGER, he follows the spirit of the dictum of VOLTAIRE: “I may disagree with what you say,but I will defend, to the death, your right to say it”; and likewise, he hopes all readers will take part in this discussion in the mutually-accorded spirit. (1) The refining business is loss-making – this point is noted here. But it does not arise in the context of Petronas reporting consistently high profits the past years. (2) The role of PETRONAS’ bankrolling the companies cited is something of its own priorities which Desiderata questions, mainly because it appears to be selective in bankrolling certain entities some of which do not flow their benefits down to the ordinary Rakyat. I here stress this is my own opinion, but I assume the National Oil Corporation has then to educate the people on why it has taken on this role as a “national” priority. (3) PROTON and MALAYSIA AIRLINES (MAS) are two highly capitalised Public-Listed Companies. Notwithstanding there are two national corporate ICONS responsible for creating employment to thousands of Malaysians, has Petronas been “prudent” in bankrolling the “business misdadventures” under some highly questionable “CEO-cum-managers” in these two PLCs in the first place, not just over a short period, but over a decade? Have the misdemeaning or non-performing corporates involved been asked to give a proper accounting to justify Petronas’ bankrolling? The 1997/98’s salaries of government servants being paid for by PETRONAS – that’s something new as far as Desi is concerned. If you (Tiger) say that Petronas contributed partially by forward-lending to the Treasury in the case of cash-flow problems at a certain period, I can accept that; but if the contributions were in the taxes paid arising from corporate earnings, that’s a provision every corporate body is governed by – same rules apply, whether listed or unlisted entities. (4) Job and wealth creation are accepted national services, but as a national trust company looking after the country’s main and depleting natural resource, isn’t that to be expected? Yes, the ordinary workers employed by Petronas share in the good salaries, annual bonus and whatever benefits due, but here I’m more concerned with the benefits that accrue to the ordinary people – the hawkers, the farmers, the small-and-medium entrepreneurs, remember? I salute the achievemnets attained by our national oil corporation. Desi does not question it has performed creditably, even outstandingly in recent years, as you did cite the ratings given by international agencies and well-regarded bodies. I only partially agree with the concluding paragragh about the stereo-typical “welfare-case mindset” as Tiger puts it, which may also lump together my PROPOSAL FOR THE ESTABLISHMENT OF A PETRONAS FOUNDATION? But this point should be equally noted by fellow Malaysians along the same line that the Prime Minister wishes to wean us from the dependency culture. BUT Desi has proposed the PETRONAS FOUNDATION to genuinely help the very poor and disadvantaged Rakyat in the country. The rationale is that THOSE IN NEED MOST MUST BE GIVEN THE MAXIMUM HELP, and PETRONAS can’t escape from the fact it holds the country’s resource on trust for the Rakyat. PETRONAS' GOLDEN PERFMANCE FOR LAST FINANCIAL YEAR On Friday, July 1, 2005 Desiderata had posted on “Stay tuned …”, viz: Petronas posts record earnings RM35.5b net profit is highest in 30-year history This news headline on page 1 of TheEdge FinancialDaily today greeted me this morning, but do I rejoice? No, not as an ordinary Malaysian citizen, for through the years I did not see any benefit flowing to us the Rakyat. The government tells me every time there is a petrol price hike that it’s because of increasing subsidies. I don’t buy that. I ask: why can’t Petronas share some of the yearly increasing profits with the ordinary Malaysians. I guess the directors, top managers and shareholders of the NATIONAL OIL CORPORATION are all laughing their way to the bank this morning. And every time there is an international oil price rise, the oil pump price also is raised, causing another round of inflation. By right, Malaysians should enjoy a decrease in pump rises with every increase in world oil prices because out nation’s crude exports are of superior quality. And hence command premism prices. Can Petronas please explain this? Is that what a corporation, holding the nation’s top natural resource on trust of the people, all about, they enjoying the perks and privileges off a nation's wealth, but foregetting the ordinary man-in-the-strreet? Do you think you earn goodwill by putting up feel-ggod messages over TV come every Malaysian festive season? I doubt it, I very much doubt it, I certainly doubt it! Let’s look at the key, relevant points of the news report, from theSun business supplement: PETROLEUM Nasional Bhd (Petronas) group posted its highest earnings in its 30-year history with a net profit of RM35.5billion , wich would provide it with funds to undertake capital expenditure of RM17.35billion for the current financial year, according to Petronas president and CEO Tan Sri Mohd Hassan Merican. Announcing the corporation’s latest results, he said for financial year ended March 31, 2005, Petronas’ net profit was 50.3 percent higher than the RM23.66billion in FYE March 31, 2004.” Desiderata then suggested that that every citizen should have been given a dividend in the form of any annual “red packet” – maybe RM1,000 to RM2,000 for those in the income bracket of monthly salary of RM2,000 and below, with increasing quantum from the highest of RM2,000 on a declining trend so that the truly “needy” Malaysians get a taste of Malaysia’s sweet oil? (end July 1 post) Strolling to BrandNewMalaysia weblog testerday, I here summarize a relevant comment (thanking Ismail, whom I could not reach at the email provided kindly by Mack Zulkifli…) some key points commented on by a reader named Ismail to Mack’s post titled Readers’ Point of View dated 3 August 2005: To Ismail I record my gratitude here for sharing some insights into the quality of fuel that Malaysians get, as opposed to fuel quality regionally. He wrote that “Actually the price comparison between Malaysia and other ASEAN countries are misleading. The quality of petrol & diesel that we are having in Malaysia are of different contents than in Thailand, Singapore & Indonesia. Malaysia is importing oil from other countries, our oil is of good quality & being processed & exported to others.” Basically, the premise cited is that Malaysians are consuming petrol that has many times higher sulphur contents, hence of lower quality and also lower priced; compared with that in Thailand & Singapore. This is one of reasons why we find diesel vehicles in our roads are emitting more black smokes that old busses in our neighbouring countries. "How can we compare our price with other countries that have higher quality of diesel & petrol?” Ismail asked. Mack concluded that it was: “Something to ponder about, in my opinion.” DESIDERATA: So, going by Ismail’s information, Desiderata has indeed argued at a different forum before that every time there is an oil price increase, by right the pump prices in Malaysia should move in the opposite direction, that is, go down. The gist of my argument follows: When the world oil price goes up by X USD (per barrel basis used here throughout), Malaysia’s oil export goes up by Y USD, where Y is bigger than X, as Malaysia’s “sweet” oils command a premium over the imported oil. So each time, Malaysia would be a NET BENEFICIARY from the same amount of oil used within the country should there be an increase in intionational oil price. The people’s problem is that the increased revenue is channeled via PETRONAS, not directly to the nation’s Treasury; even then, everything remaining equal, the corporate taxes due to a higher oil price should translate into higher revenues to the Government. “Everything being equal” refers just to the association with just one factor – that is, THE OIL PRICE INCREASE IN THE WORLD MARKET. No other factor comes into the equation as far as JoePublic is concerned. Tiger may avow this is simplistic, but Desi premised his argument precisely on this one factor alone. If any other party wishes to introduce other factors, then I surrender my case, and admit my argument then fails. I won’t bore my Readers with a winding wrap-up because there is essentially an issue with no conclusive wrap-up. This issue concerns all of us, we are affected to differing degrees every time the pump prices are adjusted upwards. Dear fRiends, just recall there have been occcasions in the past when the world oil prices fell, some times substantially, have you tasted any price reduction at the “sweet” pump? I stand corrected on this claim, for memory recall can be hazardous, as much as the “dirtier petrol fumes” emitted by the vehicles on the Malaysian highways than those in Thailand and Singapore. Don’t believe me, ask Sdr Ismail, who I hope will oblige by getting in touch, tahnking you in advancel: (Should you be reading this, Ismail, please do get in touch with Desi at chongyl2000@yahoo.com;)