Malaysian Disease

from 1924 till 2000, oil prices hovered between us$20 per barrel to $30. At these price level, government's subsidies for oil then was not an issue. Y'all ever heard about the dutch disease?

The experience of the Netherlands in 1959 after the discovery of large natural gas fields only to see the rest of its economy shrinking led to the term " Dutch Disease"

I will argue that malaysia did not experience the dutch disease since 1974, for reasons that:
A single minded pursuit of an export-oriented industrilisation policy since the 1970s has seen the manufacturing sector grow from RM 36.5bil in 1987 to RM491.9bil by 2008.In fact, it was during this period that Malaysia emerged as the world largest exporter of Electrical and Electronics ( E&E) appliances with its export value growing from RM11bil in 1987 to RM277.3bil by 2008.

Given malaysia's limited oil reserves, petronas knew that its long term survival required it to extend beyond the shores of Malaysia. It made crucial discovery in vietnam in 1994, and later in cambodia, china, and algeria. Today, petronas operates in at least 30 different countries, has more than 100 subsidiaries and owns a fleet of more than 100 tankers and ships through MISC.

Petronas started contributing to government revenue in 1976 with a sum of RM300mil, rising to RM2bil a year by 1981. Due to incresing oil prices, by 2005 it was able to provide RM32.1bil to government revenue, incresing to RM74bil in 2009 which formed about 45% of total government revenue for the year. Since itc incorporation, Petronas has paid RM471bil to the government.

Petronas as an off budget agency directly under the prime minister. Its large reserves made it a tempting target for bail-outs. It was asked to bail out Bank bumiputra in 1985 with an injection of RM 2.5bil when the bank colapsed under the weight of loans to the Hong Kong Carrion Property Group. It was again directed to bail out the same bank at RM1bil in 1991. When Bumiputra Bank collapsed for the 3rd time in 1997, was petronas again asked to come to the rescue? Only Tan Sri Merican ( then CEO ) would ever know. Petronas also bailed out KPB (konsortium perkapalan bhd) through MISC, which suffered RM2bil losses during the 1997 financial crisis.

At the peak of Asian financial crisis, petronas went ahead and completed the twin towers (RM6bil) and Putrajaya ?(RM22bil).

Malaysia is known for being a premier in E&E hub for asia, but not as an oil n gas hub. There are only about 60 companies listed on bursa that are related to oil n gas activities, which is equivalent to the number listed on the Singapore Stock Exchange and Singapore are not even an oil producing nation!!

The wealth of our resources has not filtered down to the economy, particularly the SME (small and medium anterprises) sub-sector that should be the back bone of any growing economy.