KUALA LUMPUR (politicsnowmy.blogspot.com) - News that Malaysia's state-controlled oil and gas firm Petronas is mulling the sale of a minority stake worth an estimated US$300 million to US$500 million in a renewable energy unit it owns has raised eyebrows.
Few in the financial world think the deal is a purely commercial decision given that the dividends Petronas pays to the government, now led by Prime Minister Anwar Ibrahim, is a chief source of funding for whichever coalition that leads the country.
"Of course, it does not mean the Petronas dividends can be directly used by the ruling Pakatan Harapan coalition or its ally Umno-BN to fund their political activities. But indirectly, the money as well as cash raised from sale of assets can be used to fund new deals or projects that involve new cronies while shutting the door on old cronies linked to past regimes," a former head of money at a foreign back told PoliticsNow Malaysia.
Coming amid a strong push by the Anwar administration to remove and reduce as much of the government's subsidy bill as is possible, the latest stake sale raises questions especially as renewable energy is a key growth sector identified and targeted by the Anwar administration as well as by the regimes that preceded his.
Among possible reasons were to pay down government debt which has crossed the RM1 trillion mark, redistribute income via new programs, launch new major infrastructure and development projects and given the rather embarrassing track record of the majority of Malaysian politicians, some pundits even speculate it was to build a war chest to win the 16th general election due latest by 2027.
In 2023, Petronas paid a total of RM40 billion in dividends to the government while its National Trust Fund contribution amounted to RM2 billion, Petronas president and group chief executive officer Tengku Muhammad Taufik Tengku Aziz had said. Its total dividend payout in 2022 was RM50 billion.
According to a Bloomberg report, Petronas now wants to sell a minority stake in Gentari Sdn Bhd to help expand the unit's business. Gentari was formed in 2022 with the aim of delivering a suite of renewable energy, hydrogen and green mobility solutions. However, the proposed stake sale is still preliminary with the size of the sale and Gentari’s valuation still under discussion. At the end of the day, Petronas may also decide not to sell, the report added.
ANWAR'S CASH-RAISING EXERCISE
Whatever the outcome of the Gentari plan, what is clear for now is that despite the many declarations of intention to reform the country and the economy, the 77-year-old Anwar has yet announce any mid-term integrated plan to reduce national debt or listed out programs to redistribute income or improve the socio-economic standing of the people via pathways that include education.
In the Budget 2025 unveiled on October 18, while quite huge allocations were given to the Education Ministry for next year, many wonder if the minister in charge Fadhlina Sidek had any idea what to do with the money.
As for the development and infrastructure projects, Anwar had fired out a warning that there would be "no mega projects". Yet Malaysia, while more 'physically' advanced than all its Southeast Asian neighbors except perhaps for Singapore, does not really quite have enough good quality, functioning and sustainable infrastructure needed to carry the country into the next decade of growth.
"What we have are big expensively tolled highways that suddenly converge and end in small country-like lanes which create even greater traffic congestion. We also have in abundance individual projects by individual construction players that keep building unneeded condos and office blocks when the trend should be guided by the government towards large, bold and integrated developments that can generate real income for the country, be it from foreign buyers, business investors or tourists," the banker told PoliticsNow Malaysia.
"Only (ex-premier) Najib Razak's TRX is up to mark and bold enough in its vision, size and first-world quality to differentiate Malaysia from the rest of Southeast Asia. Only then can such development bring value to the economy - by being a money spinner and revenue generator."
NO MEGA PROJECTS?
Indeed, Anwar should not be surprised that his "no mega projects" did not go down as well or as 'heroically' as perhaps he had hoped when he said it during last week's Budget presentation.
"When there are no major projects or as the PM called it mega projects, there's no stimulus for high growth and the economy will slow down. This at a time when economic growth is not yet fully robust and still feeling its way out from Covid-19 and the Ukraine war," an economist who asked not to be named told PoliticsNow Malaysia.
"Anwar must know it's the job of the government to prime the economy when the going is slow or a recession can be triggered. Fine, if he believe there's already too much construction going on in Kuala Lumpur (the capital city) but then he should identify plans to develop the outlying regions and states that he wants targeted, such as Johor or Penang or Ipoh or Seremban. But to just close the door on development projects is not wise. Malaysia still needs infrastructure - especially of the quality type and not the rubbish that we often get. It needs better planned projects be it for transportation or schools or colleges or commercial developments or tourist attractions. So long as the quality is first-world and the government of the day doesn't self-sabotage with corruption, for example at the Immigration, or scare off people with excessive religious extremism and racism, it is for Malaysians to collect money from other Asians looking for second homes or a place to visit, shop and spend money.
"There really are not many choices in the region that can say match the quality and quite miraculous growth in the popularity of the TRX. The worst scenario is of course to divert and approve projects on an ad-hoc basis, which has been the style of past regimes. Very often, their criteria may not have been national benefit but how to benefit their own cronies and often, their cronies only wanted the quickest and fastest way to build, finish and then cart away the largesse. Let's hope the Anwar regime will steer clear of this and look for an integrated, high-quality and as far as possible non-corrupt approach."
Written by Stan Lee, PoliticsNow Malaysia
https://politicsnowmy.blogspot.com/.
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