Petronas had earlier announced that its net profit before tax for its half year ending September 2009 stood at RM31.2 billion versus RM63.3 billion in the same period a year ago, or a sharp decline of 50.7%.
In fact, Petronas had to borrow approximately RM15 billion in July via the issuance of 10 year conventional notes and five-year Islamic sukuk. This means that Petronas is in effect borrowing money to pay dividends to the Government!
I had in my speech during the Finance Bill 2 (2009) on 15th December specifically raised the fact that the Government is “sucking Petronas dry” leaving Petronas with very little to reinvest for future returns. However, the Deputy Minister of Finance, Dato' Chor Chee Heung vehemently denied my assertion. He said
...selain daripada itu juga... dividen daripada Petronas kepada kerajaan sudah begitu banyak tahun tidak berbeza-beza. Kita simpan. Maksudnya Petronas mempunyai retain profit yang begitu banyak sekali dan kalau tahun lepas RM30 bilion, tahun ini juga kerajaan akan mendapat dividen RM30 bilion. Ini saya ingin memberitahu Dewan yang mulia ini iaitu Kerajaan Barisan Nasional membentuk kerajaan di negara ini selama 50 tahun lebih its not for nothing you know my friend.I had immediately rebutted that the Deputy Minister did not know what he was talking about by providing figures derived from the Government's own economic reports and financial statements. I had argued that the percentage of Petronas profits retained for reinvestment has dropped from 42.5% in 2005 to 31.2% (2007) to a low of 21.1% (2009).
In fact, the Government has increased its dividends from Petronas annually over the past 5 years. In 2005 the dividend paid by Petronas was only RM9.1 billion. It was increased to RM13.0 billion in 2006, RM20 billion (2007), RM24 billion (2008) to RM30 billion in 2009. The above figures completely refute the Deputy Minister's statement in parliament.
The reckless increase in the Government's operating expenditure from RM80 billion in 2004 to RM161 billion in 2009, and the resulting need to sustain and maintain our big government has resulted in the inevitable temptation to dip into the Petronas coffers.
The Government had insisted that it is introducing the Goods & Services Tax as a measure to reduce its dependence on revenues from the oil and gas sector. However the above evidence shows clearly that the over-dependence on the petroluem sector was caused by the BN government which had milked Petronas recklessly over the past decade. Now that Petronas is unable to fulfil the Government's insatiable appetite, Barisan Nasional is now turning to the rakyat to fund its bloated expenses by implementing various new taxes such as the credit card tax, the real estate property gains tax and the goods and services tax.
With Petronas now having to dip into its cash reserves, it is clear that the Government is slowly but inevitably killing the goose that lays the golden eggs, and from the replies given by the Finance Ministry in parliament, the Government is also clueless about it.
We call upon the Prime Minister to enact a legislation to ensure that our golden goose gets the necessary protection and will not be recklessly abused, by
- legislating that Petronas retain at least 50% of its profits for future reinvestments.
- ensuring that the windfall revenue are only invested in economically productive and necessary sectors such as human capital, renewable energy and green technology.
- legislating that at least 20% of these contributions should be “saved” when economic growth exceeds 3% per annum in a National Stimulus Fund for use during economically challenging times.