Saturday, December 12, 2009

The Oil Curse Strikes

I wrote a fairly extensive piece more than 2 years ago in June 2007, which was published in Aliran (after being rejected by The New Straits Times), and blogged here (Part I and Part II), on "Oil & Gas Windfall: Boon or Bane?" At that point in time, the Government wasn't at all concerned because the oil prices were hitting the roof, peaking at US$150 per barrel in July 2008. Nobody then thought that the party will soon turn into a crisis.

Now that the oil prices have declined by some 50% today, or as low as 20% of its peak just a few months ago, the chickens have come home to roost. Previously ignorant and complacent, the Barisan Nasional government is now hard up for cash, as its revenues from the oil and gas sector gets severely hit. The solution as the Prime Minister and Finance Minister, Datuk Seri Najib Abdul Razak says, we need to make up for the shortfall by taxing the rakyat more. Hence our 2010 Budget is all about taxes, the new credit card tax, the real estate property gains tax and the upcoming goods and services tax.

UMNO veteran, former finance minister and chairman of Petronas, Tengku Razaleigh Hamzah spoke his mind today, that "the country has squandered its oil wealth".
KUALA LUMPUR, Dec 12 — Petronas founder and former Finance Minister Tengku Razaleigh Hamzah said today that Malaysia had squandered its oil wealth and had become an “oil cursed” country dependent on it like a narcotic for quick fixes.

In his most scathing remarks yet about the management of the country's oil reserves and the economy, Tengku Razaleigh said oil money had been used as "a giant slush fund that has propped up authoritarian rule, eroded constitutional democracy and corrupted our entire political and business elite."

"Our oil receipts, instead of being applied in the manner we planned upon the formation of Petronas, that is, according to its original developmental purpose, became a fund for the whims and fancy of whoever ran the country, without any accountability.

"The oil that was meant to spur our transition to a more humane, educated society has instead become a narcotic that provides economic quick fixes and hollow symbols such as the Petronas Towers. Our oil wealth was meant to help us foster Malaysians capable of building the Twin Towers than hire foreigners to build them, a practice in which we preceded Dubai. I would rather have good government than grand government buildings filled with a demoralised civil service," he said in his speech at the Young Corporate Malaysians Summit here today.

He said that when he started the national oil company in 1974, he did not foresee that he would one day wish that the country had not discovered oil.

The Umno veteran said that Malaysians were no longer productive and no longer used their ingenuity to improve themselves to take the leap forward...
For the full article, visit The Malaysian Insider or
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