There is however a not-so-pretty side to this success story.
Petronas has long been tapped to finance pet projects of its political masters, particularly during Mahathir’s first tenure as premier that stretched between 1981 and 2003.
These pursuits include funding bailouts of distressed entities with close political ties, such as the financial rescue of a troubled shipping firm owned by Mahathir’s eldest son Mirzan Mahathir in 1997, and financing pet projects, such as developing the administrative capital Putrajaya, located about 35 km from the capital Kuala Lumpur, that cost RM30 billion.
The oil corporation has also played the role of lender of last resort in two separate bailouts in 1984 and 1989 of the now-defunct state-owned Bank Bumiputra that together amounted to more than RM6 billion.
The tar of politics in Petronas’ otherwise strong record is due to its unique charter.
While the national oil corporation was formed under Malaysia’s Companies Act, a special set of laws were designed to regulate the entity under the 1974 PDA.
Unlike other companies registered under the Companies Act, Petronas is not required to file and publish and file annual accounts.
What’s more, the PDA also stipulates that the oil corporation “shall be subject to the control and direction of the prime minister”.
As a result, over the last five decades, successive governments have increasingly come to rely on Petronas to fund ventures outside of its core business, turning it into the country’s chief fiscal “cash cow”.
To be sure, the Malaysian government has long dominated various sectors of the economy through state-owned entities, such as Khazanah Nasional Berhad and Permodalan Nasional Berhad, that in turn own dominant stakes in several of the largest companies listed in on the Malaysian stock exchange.
Through this model, the government accrues revenues from dividends paid by public listed entity companies, but they pale in comparison to what Petronas contributes annually.
According to RHB Research, apart from dividends of RM32 billion the government received from Petronas in 2024, the government accrued another RM40 billion in the form of cash and tax payments and other contributions.
https://www.channelnewsasia.com/asia/in-focus-petronas-malaysia-anwar-ibrahim-sarawak-5275341
