“Petronas paid out a total of RM26.839 billion in royalties to the Federal Government and the state governments of Terengganu, Sabah and Sarawak for the financial years ended March 2004 till March 2007.” http://www.Malaysianinsider.com May 14 2008
Here’s an idea, why not pay the royalties from Petronas direct to Malaysians. Most of of it to the residents of Trengganu, Sabah and Sarawak. If the oil is from there, then the money should be channeled for the present and long term benefit of the people of these states.
We might not trust BN politicians, and many others might not trust Pakatan Rakyat elected representatives, and as an extension, anyone likely to run Trengganu, Sabah and Sarawak, so why not just give the money to the people direct and let them use it best fit their personal needs?
For years we get word from Finance Ministers that the oil money received by the Federal Government is not an amazing amount. However this less than amazing amount still has managed to pay for duplicate towers in the KLCC, an almost abandoned building in Dayabumi and the lavish launch of the Eastern Corridor. If that is what that this little amount of money can do, then maybe we can just give it to the people.
Alaska through its State of Alaska-Permanent Fund Dividend do this already and it is a model that works.
Before we get to the model, let us work out the principle behind a pay the people direct idea.
The resource belongs to all Malaysians, and more so to the respective states where the resource is dredged. Why more to the states in place? The Federal model demands for state autonomy, and more so defends state autonomy in commerce and revenue. This is underlined by the Federation of Malaya Constitution and then the 20 point in the Malaysia Agreement with the Borneon States. It is only fair.
Second, the management and business of oil extraction, processing and selling has been set up with Petronas in 1974, which is fair. However the nett returns from this Nationally owned company cannot just be about the present, since oil is both an exhaustive resource and therefore should be managed to benefit both present and future Malaysians (and as a corollary the residents of Trengganu, Sabah and Sarawak).
So the oil money should not be handed over to a Federal Government whose commitments due to political exigencies is primarily short term. To spend more and show results in the immediate future. Worry about future voters when they are eligible to vote ( and of course as a second qualifier, registered to vote).
Years ago at my alumni meeting, a member asked what is done with life membership dues. The answer was we spent it. The member in his supplementary question insisted that money a member pays for the rest of his life, should be something available for the rest of his life. Which made most sense to us.
So we started a Life Membership Fund. Only the interest from the fund is used for activities. The principal protected. Same model used by the Alaskan Permanent Fund Dividend Division. Every year, oil income from the oil exploration company (similar to Petronas) is factored to a fund, where the principal is protected and further income is derived from investing the principle.
Dividends are yielded, and based on residency requirements and calculations, the dividend is forwarded to the particular resident. The payment for 2007 was 1654 US Dollars for each resident, which is RM 5400. Not bad for being just a resident.
Imagine if a family of 5 in Trengganu, receiving RM27000 for a year. Already the state’s income per family stats would shoot up. Obviously the amount of oil dredged in Trengganu is different, and there would be a setting in period, however the potential of great returns is very likely.
The difference with the money in the hands of the Federal Government and the money in the hands of the people through a Permanent Fund, is that the former is a small group of Malaysians spending the money as if it is theirs, ergo Dayabumi, and the latter where the Fund management is purely financial and not interested in politics, looking for the best returns for their owners (the people of Malaysia).
I can see the 26.839 billion dollars well managed by fund managers, and I can see real dividends in very shorts years for Malaysians.
How about that eh?