13MP: Proposed reform for education has structural weaknesses
He stressed that despite relatively high education spending, the country has underinvested in what matters most: teachers and early childhood development.
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Free Malaysia Today
42 minutes ago
- Free Malaysia Today
Credit rating at risk of dropping if Petronas's revenue plunges, says Rafizi
Former economy minister Rafizi Ramli said negotiations between Petronas and Sarawak-owned Petros must be carried out meticulously. KUALA LUMPUR : Negotiations between national oil company Petronas and Sarawak-owned Petros over the rights and distribution of gas resources must be done meticulously, former economy minister Rafizi Ramli said. Rafizi said any oversight would be detrimental to the overall economy. He said that if Sarawak's claim to the gas resources is entertained without considering the existing overall financial structure, Petronas risks losing between RM15. billion and RM20 billion a year. 'It is not a paltry sum,' he said in the latest episode of his podcast 'Yang Berhenti Menteri'. Rafizi said Petronas contributed between RM30 billion and RM35 billion annually to the government's coffers. 'If this sum drops, it would have an impact on the nation's ability to fund basic services,' he said. Petronas is the main contributor to the country's revenue. Its yearly dividends fund several public services, including schools, hospitals, infrastructure pensions, and the salaries of civil servants, including those in Sarawak. Rafizi said even if the revenue is not channelled into the state government's coffers, the schools, hospitals and roads in Sarawak were built with federal funds, which are derived from Petronas's dividends. 'So, if Petronas loses RM20 billion, the company will be unable to pay the RM35 billion in dividends to the federal government,' he said. This inability by Petronas to do so could lead to a drop in the country's credit rating and, in turn, would see the government's cost of borrowings surge, he said. Rafizi said Malaysia currently pays RM48 billion annually on interest alone, and the figure could increase to RM60 billion if credit ratings were to take a dive because of uncertainty in the oil and gas sector. The law and Sarawak's claims The overlapping laws, namely the Petroleum Development Act and the Oil Mining Ordinance, have compounded the issue. Sarawak claims sole rights to energy resources found up to 200 nautical miles from the edge of its territorial waters based on maps and existing rights it had before joining Malaysia in 1963. However, federal laws such as the Continental Shelf Act 2012 state that rights over oil and gas resources located beyond three nautical miles fall under federal jurisdiction, and therefore, belong to Petronas. Rafizi said Sarawakians deserved more revenue from their resources, but there was a need for prudence when demanding it. 'If investors feel that our country is unstable when it comes to oil and gas policies, they will pull out. This industry needs billions of ringgit upfront, and if investors feel that there is political uncertainty, they will head to Indonesia, Surinam or other places,' he said. In April, US oil company ConocoPhillips confirmed its exit from the Salam-Patawali deepwater oil and gas field, also known as Block WL4-00, off Sarawak's coast, believed to be because of uncertainty over policies and law. Earlier this year, Shell MDS was granted an injunction allowing the company to continue its operations without disruption until legal proceedings between Petronas and Petros have been resolved. Rafizi said investments were based on long-term agreements and investors could pull out if the original contract was amended unilaterally, which would impact investor confidence as a whole. He said the Distribution of Gas Ordinance 2016 in Sarawak accorded the state full control of the commodity, through Petros, even though the original agreement to buy and sell gas was made between Petronas and buyers from Japan and China. He said investors took into account profit projections for these long-term contracts, which generally last 30 years, before deciding to pour in as much as RM6 billion to build the necessary infrastructure. However, there were risks if the contract was unexpectedly amended, especially when it comes to additional demands being made. 'Imagine, what if one side were to ask for an additional RM15 billion on top of the original agreement. Where will the money be sourced from? And if Petronas would have to bear it, the international buyers would protest,' he said. He said any sudden changes without negotiations beforehand would also prompt investors to pull out or discourage new investments. If Petronas was plagued with uncertainty, the impact would not only be felt by the oil company but the country's financial ecosystem. Politics must not ignore economic realities Rafizi, who was previously with Petronas, said any negotiation must result in a win-win solution. 'I agree that Sarawak should get more, but we need to find a way that will not impact the industry, Petronas's sustainability and the country.' He said a restructuring of the oil and gas revenue must be done through investing in development and not by neglecting the country's economic structure that is currently under pressure.
New Straits Times
2 hours ago
- New Straits Times
Bursa Malaysia to trade higher next week on US rate cut, upcoming 13MP debate
KUALA LUMPUR: Bursa Malaysia is likely to trade higher next week, supported by improved investor sentiment following the reduction in United States (US) tariffs and the upcoming debate on the 13th Malaysia Plan (13MP) during the Parliamentary sitting beginning Aug 4. UOB Kay Hian Wealth Advisors Sdn Bhd head of investment research, Mohd Sedek Jantan, said the FTSE Bursa Malaysia KLCI (FBM KLCI) is expected to trade within the 1,545 to 1,555 range. He noted that export-oriented stocks are expected to lead the rebound, with technology counters poised to benefit benefit from both global supply chain repositioning and the country's ongoing digitalisation agenda. "The 13MP unveiled by the Prime Minister Datuk Seri Anwar Ibrahim on Thursday anchors the medium-term policy around geoeconomic resilience, supply chain realignment, and digital transformation. "Of particular note is the plan's emphasis on artificial intelligence, which reinforces our constructive view on the long-overdue re-rating of the technology sector," he told Bernama. Mohd Sedek also noted that recent domestic data supports the case for recovery, highlighting the S&P Global Malaysia Manufacturing Purchasing Managers' Index (PMI), which rose for the third consecutive month—from 49.3 in June to 49.7 in July. "While the index remains just below the expansion threshold, the steady improvement signals ongoing stabilisation in the manufacturing sector," he said. Furthermore, Malaysian equities remain undervalued compared to regional peers as investors shift their focus to China's July trade data, which is due next Thursday. "As such, we remain cautiously optimistic that foreign investors will return as net buyers, particularly as they look to diversify away from the overstretched US equity markets. On a weekly basis, the benchmark index eased 0.41 of-a-point to 1,533.35 on Friday from 1,533.76 a week earlier. The FBM Emas Index increased 18.51 points to 11,525.33, the FBMT 100 Index gained 15.91 points to 11,285.63, and the FBM Emas Shariah Index climbed 11.78 points to 11,540.76. The FBM 70 Index increased 106.305 points to 16,607.57 while the FBM ACE Index dropped 14.65 points to 4,624.37. By sector, the Financial Services Index put on 25.97 points to 17,480.2, the Energy Index went up 9.75 points to 749.60, while the Plantation Index decreased 63.82 points to 7,370.97. Weekly turnover expanded to 15.94 billion units worth RM11.88 billion from 11.92 billion units worth RM11.43 billion in the previous week. The Main Market volume swelled to 8.33 billion units valued at RM10.46 billion compared with 6.63 billion units valued at RM9.70 billion previously. Warrants turnover declined to 5.50 billion units worth RM859.03 million from 7.10 billion units worth RM1.15 billion in the preceding week. The ACE Market volume improved to 2.10 billion units valued at RM561.51 million versus 1.68 billion units valued at RM577.05 million a week ago.
New Straits Times
2 hours ago
- New Straits Times
Ringgit to trade at 4.25-4.26 versus greenback on Fed rate cut optimism
KUALA LUMPUR: The ringgit is expected to trade between 4.25 and 4.26 against the US dollar next week, following weaker-than-expected United States (US) Nonfarm Payrolls (NFP) data for July, which may prompt the US Federal Reserve (Fed) to consider an interest rate cut at its September meeting. The NFP data for July fell short of expectations to just 73,000 jobs, significantly below the consensus estimates of 106,000. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the latest NFP data could boost sentiment for the ringgit, as it increases the expectations that the Fed may reduce the Federal Funds Rate in September. He also noted that NFP figures for the previous two months — May and June — were revised sharply lower, further reinforcing expectations of a potential rate cut. "Such views were very much aligned with the two dissenters during the last Federal Open Market Committee (FOMC) meeting, which favoured a quarter-point cut. "The outlook for Fed Fund Rate was the main consideration among the traders as the Fed was seen as indecisive on further monetary policy accommodation during the recent FOMC meeting," he told Bernama. Meanwhile, Mohd Afzanizam said the US government's recent decision to impose a reciprocal tariff of 19 per cent on Malaysia-- down from a previous rate of 25 per cent-- could help mitigate the impact. "This is a welcome move, and there may be room for further negotiations. An improved trade arrangement could prove positive for the ringgit over the medium term," he added. Furthermore, he believes that the recently announced 13th Malaysia Plan (13th MP) will support the ringgit in the medium to long term. Under the plan, development expenditure has been increased to RM430 billion, which is expected to boost domestic demand and encourage investment activities, ultimately supporting Malaysia's gross domestic product growth. The 13th MP was tabled by Prime Minister Datuk Seri Anwar Ibrahim in Parliament on Thursday, with a focus on driving sustainable growth based on value creation across all sectors. On a Friday-to-Friday basis, the ringgit ended the week lower against the greenback, closing at 4.2750/2815 versus 4.2195/2245 previously. However, the local note traded higher against a basket of major currencies. The ringgit appreciated vis-à-vis the Japanese yen to 2.8407/8452 from 2.8529/8565 on Friday the previous week, rose versus the euro to 4.8752/8826 from 4.9507/9566 last week, and gained against the British pound to 5.6208/6293 from 5.6786/6853 previously. Against ASEAN currencies, the ringgit trended mostly higher. The local note firmed against the Singapore dollar to 3.2907/2960 from 3.2937/2978 at the end of last week, strengthened versus the Thai baht to 13.0058/0319 from 13.0268/0478, and improved against the Philippine peso to 7.35/7.36 from 7.38/7.40 in the preceding week. However, it edged lower versus the Indonesian rupiah to 258.8/259.4 from 258.5/258.9 in the previous week.
