Dear Mr. Prime Minister,
We acknowledge that Petronas is a national company. However, while it is de jure a Malaysian company, essentially, it’s a de facto Peninsular Malaysia company. Its operations, investments, economic focus, and decision-making processes suggest it functions predominantly as a Peninsular Malaysia company. Ponder on the points I am going to present. I stand to be corrected for any inaccuracies, but I make no apologies for addressing these inequities.
Lest you forget, be reminded Sarawak holds 60% of Malaysia’s gas reserves and 40% of its oil reserves respectively. Sarawak has contributed immensely to Petronas and the nation. Sarawak makes Petronas and not Petronas makes Sarawak. Given this, an honest question must be posed. Is Petronas genuinely a Malaysian Company? We want a straight and honest answer. If you think it isn’t then reform it forthwith without further ado. Avoid the usual recourse of forming a cabinet committee or parliamentary committee or special committee. We are sick of the various committees with their never-ending meetings with no or sickening resolutions. If Petronas is indeed a national company, then we urge our Sarawak leader to take immediate measures to ensure equitable treatment
Petronas’ key operations and decision-making centres are overwhelmingly concentrated in Peninsular Malaysia. The company’s headquarters, located in Kuala Lumpur, is a symbolic and functional epicenter of its activities. Facilities such as the iconic Petronas Twin Towers highlight its Peninsular-centric operational base, sidelining the significant contributions of Sarawak and Sabah.
A large portion of Malaysia’s oil and gas resources are extracted from Sarawak and Sabah. However, the financial benefits and infrastructural developments accruing from these resources are disproportionately distributed. Sarawak and Sabah remain decades behind the Peninsular. Petronas’ contributions to the national budget predominantly benefit federal projects and infrastructure development in Peninsular Malaysia. Despite being resource-rich, Sarawak and Sabah are lagging in development indices such as healthcare, employment, poverty, education, and infrastructure. This disparity reinforces the perception that Petronas primarily serves Peninsular Malaysia’s economic agenda.
The royalty is another glaring inequity. The royalty arrangement provides a meager 5% of revenue to Sarawak and Sabah, while the remaining is used to support federal initiatives, most of which are concentrated in Peninsular Malaysia. Let’s probe and dissect further the 5% royalty. I suspect the 5% royalty is manipulated and subjected to accounting tricks and does not reflect market realities. Petronas is also selling gas at a subsidized rate to Tenaga Nasional and independent power producers in the Peninsular. Their task is to provide power, only to Peninsular Malaysia, not the whole nation. The question is whether the 5% royalty is adjusted to reflect the market price. My suspicion is most likely it is not.
The RM30B yearly dividend along with billions in taxes and ancillary fees paid to the government are also being used to service the Government’s debts of RM1.50 Trillion. Yet, how much of this RM1.5 Trillion was cascaded down to Sarawak or Sabah? 1MDB is a classic case. We are surprised to know that 1MDB was buying oil and gas assets. Hasn’t Petronas been mandated to do so? There’s something sinister going on. Maybe the siphoning of the money is easier for purchases made by companies other than Petronas. In the process of doing so, 1MDB was scammed and tricked into buying non-existent or obscure assets. It’s a karma. The public, particularly the Sarawakians want to know whether similar transactions have been executed, or in progress or are being planned. Other than 1MDB, most of the borrowings are used to fund the projects in Peninsular Malaysia, such as LRT, MRT, KLIA 2, ECRL, and Johore RTS, to name a few. Sarawakians do not feel the presence or benefit of the RM1.5 Trillion loan. The one that I know is to finance the never-completed Pan Borneo Highway.
Petronas has invested in non-core opulent assets concentrated in Peninsular Malaysia. Petronas owns Sepang Circuit, an orchestra, a university, KLCC properties, Putrajaya Holdings etc. etc. A choir is not good enough for Petronas. How many Sarawakians and Sabahans are members of the orchestra? How many times has it performed in Sarawak or Sabah? Petronas University is in Perak, a state with no significant contribution to the oil and gas industry. Why does Petronas want to own a university? Isn’t it more practical to establish a chair or sponsor a faculty at one of the local universities? Previously, it even owned a loss-making hospital, Prince Court. These investments raised questions about Petronas’ business model. Global giants such as Google, Apple, Amazon, Meta, Tesla, and Microsoft focus heavily on research and innovations and buying related strategic assets to maintain their competitive advantages and sustainability. Unlike Petronas, they do not go on a buying spree acquiring opulent non-related assets.
Senior leadership roles and key decision-making positions in Petronas and all its subsidiaries are overwhelmingly held by individuals from Peninsular Malaysia. Sarawakians and Sabahans are grossly underrepresented underscoring a lack of sensitivity in the governance of a company that heavily relies on resources from these states. Moreover, the creation of sinecures for former prime Ministers, ostensibly to act as an advisor further underscores the Peninsular-centric approach. By extension, senior leadership in all GOCs, GICs, GLICs and government agencies are also overwhelmingly held by individuals from the Peninsular. Hence, not only Petronas is a de facto Peninsular entity, but the whole nation is a de facto Peninsular government.
Once upon a time, Sarawak owned an oil refining facility in Lutong, the first in Southeast Asia. The relocation of downstream activities to Malacca, Port Dickson, and Kerteh and the establishment of Pengerang petrochemical complex have cost Sarawak billions in wealth, jobs and businesses. Arguments, citing sustainability, market proximity or shipping routes are dismissive and fail to justify the blatant marginalisation. If Brunei can sustain its downstream activities and Singapore can thrive as a major oil and gas hub despite being a non-producer, why can’t Sarawak?
Not so long ago there was a video circulating in which Tengku Razaleigh admitted UMNO siphoned RM1.4B from Petronas. I suspect this was done over time and therefore the siphoning of the money may also have also occurred during your earlier tenure as Finance Minister. When this video came out in public, you and your opposition colleagues didn’t deny the matter. This scandal together with the questionable asset purchases raised further concern about whether Petronas is shielded from similar misuse in the future.
Sarawakians have long endured the inequities perpetuated by Petronas and the federal government. It is time for decisive action.
We are urging the Premier to recall all Sarawak’s leaders, particularly the politicians to return and harness their expertise to put Sarawak on a phenomenal development trajectory. Let the second stringers serve the federal government until they are ready to serve Sarawak.
Until a genuine reform occurs, Petronas is considered an interloper in Sarawak.
Sincerely,
Anak Sarawak
Winter 2024
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