Malaysia: Oil-Cursed?

Petronas founder and former Finance Minister Tengku Razaleigh Hamzah lamented 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 to date 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.

This he blamed on the mismanagement and abuse of the country's oil reserves.

"Our nation is blessed with a modest quantity of oil reserves. As a young nation coming to terms with this natural bounty in the early 1970s, our primary thought was to conserve that oil. That is why, when Petronas was formed, we instituted the Petroleum Development Council. Its function was to advise the PM on how to conserve that oil and use it judicially for national development. We knew our reserves would not last long.

"We saw our oil reserves as an unearned bounty that would provide the money for modernisation and technology. We saw our oil within a developmental perspective. Our struggle then, was to make the leap from an economy based on commodities and low-cost assembly and manufacture to a more diverse, economy based on high-income jobs."

He said the government then had planned to apply oil royalties to strategic investments in human capital.

The government, he said, was to have used whatever money was left after making cash payments and allocations for development funds, and place it in a Heritage Fund for the future. The Heritage Fund was for education and social enrichment.

"Instead of being our ace up the sleeve, however, our oil wealth became in effect a swag of money used to fund the government’s operational expenditure, to bail out failing companies, buy arms, build grandiose cities amidst cleared oil palm estates. Instead of helping eradicate poverty in the poorest states, our oil wealth came to be channelled into the overseas bank accounts of our political and politically-linked class. Instead of being the patrimony of all Malaysians, and for our children, it is used as a giant slush fund that has propped up authoritarian rule, eroded constitutional democracy and corrupted our entire political and business elite.

"Malaysia is now an ‘oil cursed’ country. We managed to arrive at this despite not having a lot of oil.”

Tengku Razaleigh said that his generation's failure had been both "political and moral."

"We have allowed greed and resentment to drive our politics and looked the other way or even gone along while public assets have been stolen in broad daylight.

"I encourage you to take up the cause of national development with the ingenuity that earlier generations of Malaysians brought to this task, but the beginning of our journey must be a return to the basics of public life: the rule of law, honesty, truth-telling and the keeping of promises," he told the young corporate leaders in his speech.

“So before we can reinvent ourselves we need to recover our nation. That larger community, bound by laws, democratic and constitutional, is the context of economic progress, it is the context in which young people find hope, think generous thoughts and create tomorrow."

With less than possibly 10 years of commercial oil reserves left,aren't we just too late to right the wrong? Or should we just start crying over spilt milk?