Former finance minister Tengku Razaleigh Hamzah did not mince his words in a stinging speech at the Young Corporate Malaysians Summit today when he described Malaysia as an “oil cursed” country.

“When I started Petronas in 1974, I did not realise I would see the day when I would wish we had not uncovered this bounty,” lamented Razaleigh.

“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.”

tengku razaleigh.jpg Razaleigh, once an Umno vice-president who almost dislodged then party leader Dr Mahathir Mohamad more than 20 years ago, was one of the architects in establishing state-owned oil company Petronas in the 70s.

According to the veteran Umno leader, Malaysia is now caught in a middle-income trap, “stuck in the pattern of easy growth from low-value-added manufacturing and component assembly and unable to make the leap to a knowledge-intensive economy”.

He said the original intention of Malaysia’s “modest quantity of oil reserves” was to help the country make the leap from an economy based on commodities and low-cost assembly to a more diverse economy based on high income jobs.

“We saw our oil reserves as an unearned bounty that would provide the money for modernisation and technology.”

However, the billions of ringgit earned from oil exports over the past three decades have been squandered by the government.

“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,” he told the 300-strong audience at the first summit of the Young Corporate Malaysians held in Menara Integriti, Kuala Lumpur.

Our oil wealth gone

A recently launched book, 'Malaysian Maverick: Mahathir Mohamad in Turbulent Times', has estimated that about RM100 billion have been wasted on financial scandals during Mahathir’s 22-year rule.

Author Barry Wain, who is a former editor of the Asian Wall Street Journal, writes that most of the scams, which included a government attempt to manipulate the international tin price and gambling by Bank Negara on global currency markets, occurred in the go-go years of the 1980s.

However, some analysts have put the figure even higher.

Time magazine quoted Daniel Lian, a Southeast Asia economist at Morgan Stanley in Singapore, saying that the country might have lost “ as much as US$100 billion ” (RM340 billion) during the Mahathir years.

Razaleigh argued that Malaysia’s oil wealth has been squandered and used “to bail out failing companies, buy arms, build grandiose cities amidst cleared palm oil estates”.

“Instead of helping eradicate poverty in the poorest states, our oil wealth came to be channeled into our political and politically-linked class,” he added.

“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.”

Petronas has contributed 40 percent of the national budget over the years but such a great reliance on oil income is getting untenable.

The government will in the coming months seek to broaden the tax base by introducing a goods and services tax (GST) where all Malaysians are required to pay an additional tax on top of income tax.

Full text of Razaleigh's speech

'Our oil wealth squandered'