Archive for the ‘Petronas’ Category



It appears that a critical mass of the Sabah electorate wants to reward Musa Aman for the good work he has done over the past several years, since he first assumed Chief Ministership in March 2003. Each person this writer spoke to heading for the early polls in Sabah had only good word to say about the chief minister. This is indeed what makes it difficult for a divided Sabah opposition – The United Sabah Alliance (USA) and its four State-based opposition parties namely Star, Parti Cinta Sabah (PCS), Sabah Progressive Party (SAPP), Lajim Ukin’s Parti Harapan Rakyat, Shafie Apdal’s Parti Warisan Sabah together with Malaya based DAP, PKR & Amanah, to attack Musa on any of his development agenda. Shafie Apdal himself has characterised Musa’s regime as marked by fourteen years of malfeasance, but could never publicly attack him on the plank of development.

In a big public meeting outside of Sandakan late 2016, Shafie asked those who attended if Musa’s reign as Chief Minister was ever marked by a lack of accountability but the response was cold. In reply Shafie fumed before the crowd: “I have no other motive than to defend the rights of Sabah”, but having held five terms Member of Parliament of Semporna since 1995 and appointed as parliamentary secretary, Deputy Minister of Housing and Local Government in 1999, Deputy Minister of Defence from 1999 to 2004, Minister of Domestic, Trade and Consumer Affairs, and later Ministry of Unity, Culture, Arts and Heritage, he has yet to prove that. On 10 April 2009, he became the Minister of Rural and Regional Development which coincided with his election to one of UMNO’s three vice-presidential posts. Shafie Apdal is hence the first Sabahan to hold a vice-presidency of UMNO but has done little to “defend the rights” of the varied population of this state.

It would not be an exaggeration to say that there is an authentic Musa wave in Sabah as is. It is no wonder that divided Sabah opposition groupies are very worried about the general sentiment generated before polling. The local opposition parties anxiety is reflected in the manner in which it is bringing issues like illegal immigrants, the re-issuance of identity cards, and the Malaysia Agreement 1963 (MA63).

Elsewhere, near Penampang, Shafie Apdal is doing what he does best – playing the polarisation game. When he said Sabahans will celebrate if the BN is defeated in Sabah, he again betrayed the fact that the party’s desperation has reached newer highs. By invoking BN, Parti Warisan Sabah believes it can consolidate Sabahan votes across all races but the party’s attempts has failed to bear fruit as voters are seen shying away from Shafie Apdal’s new party. In fact, large sections of Sabahans seem to be inclined to give Musa Aman another term.

Parti Bersatu Sabah (PBS) president Tan Sri Joseph Pairin Kitingan, the founding father of the second largest political party in Sabah, a long serving assemblyman, MP and Huguan Siou (paramount leader of the Kadazandusun community), has indicated an intention to retire from politic but is also complementing the broader sentiment in favour of Musa by holding on to his KDM vote base – to which opposition groupies have mainly tried but failed to break by raising numerous issues including the delayed Royal Commission of Inquiry (RCI) technical working committee report on illegal immigrants.

The KDMs, emotionally impacted by the down fall of the PBS Government in March 1994, seemed to have put their fullest weight behind the grand BN alliance. Pairin’s meetings are attracting unusually large crowds with hundreds of youths enthusiastically clicking away on their smart phones. I had seen a similar spectacle only during Pairin’s public meetings in Tambunan and Keningau during GE13 polls in 2013.

In many ways Sabah looks so much like a forerunner of events in national politics. Both Musa and Pairin speak the same language and the political grammar converges around a larger strategy of demanding Sabah rights under the Constitution, the Inter-Governmental Committee (IGC) report and Malaysia Act. The devolution of powers from the Federal Government to the state was an ongoing process, with the principal objective of addressing and resolving public concern over the erosion of the special safeguards granted to Sabah under the Malaysia Agreement and the Constitution.

Musa Aman articulates this strategy cogently as he says, “We are all Sabahans, who advocated a constant campaign to resolve issues between state and the federal and the Sabah Government has its own “gentler” approach – more effective, better than shouting and demanding” – “The Sabah Way”. When Musa said this a decade ago, the BN was the establishment. Today, the BN, and the forces its represents, have become the establishment, forging a front against the opposition and its divisive politics, the state government believes in consultation not confrontation.

Musa has repeated over the years that the Sabah State Government under his watch believes in diplomacy rather than confrontation and has achieved some excellent results through this approach, particularly in its negotiations with Petronas on oil and gas matters. These include the appointment of a Sabahan to the Petronas board of directors and Petronas undertaking to increase the number of Sabahans at executive and management level. Now there is a clear understanding between Petronas, the Federal Government and the state government as to Sabah State Government objectives.

UMNO is benefiting in Sabah due to the image of Musa Aman as an urbane, decent and efficient chief minister. The visit to Sabah by Wu Bangguo, member of the Standing Committee of the Political Bureau of the Central Committee of the Communist Party of China, Duke and Duchess of Cambridge, Prince William and Catherine, and many other world leaders, confirms that Musa has placed Sabah ahead of many other states, making it the most successful state in Malaysia in attracting private investments. China’s decision to open a consul-general office in Kota Kinabalu confirms the state’s growing importance as a world-class city favoured by tourists and businesses. For the first quarter of 2016, Sabah under Musa Aman managed to attract private investments in the amount of RM10 billion, way ahead of other states. Apart from that, as of September 30, the amount of cumulative investments in the private sector, under the Sabah Development Corridor projects, had reached RM114 billion since its launch in 2008. Among the many reasons include having a stable, business friendly and a prudent government as well as stringent forestry laws and strong conservation programme. Totally Protected Area (TPA) – now covers over 1.5 million hectares of the land area or some 22% of Sabah. The government policy has been launched to achieve 30% TPA by 2025 or 2030 at the latest or over 2.2 million hectares of Sabah under forest.

So tell me, which other state in Malaysia has set aside 22% of TPA including rich agricultural lands and virgin forests at high opportunity costs? Only Sabah under the Aman administration, that’s for sure.


The recent Sabah Quake has left a very damaging effect on Sabah and her people in all forms. The physical, psychological, spiritual trauma felt by Sabahans and friends of Sabah is one that cannot be erased so easily. As someone who has called Sabah my home for many years, I believe I speak for many that the Sabah Quake is a reminder of how insignificant we are to a land that had provided so much for so many. Clearly, life as we live it must take into account natures very living presence that is in as much of a position as human beings are in determining both life and death.

However, what I foresee to be the greatest burden befallen those effected by the quake is an economical one.The quake took 18 lives and left almost 20 people wounded and hurt. Over a hundred climbers were left stranded on the mountain, without other viable exit routes. Numerous homes and building in approximately 18 districts suffered structurally and more than 80 aftershocks recorded by the Meteorological Department, many more will soon be reported.

The point that I am making here is simple; There is a great need for funds designated to restoration works in Sabah. The local mountain guides (national heroes in my eyes) and affected local residents need to be taken care of till Mount Kinabalu is once again ready for climbers. In its current state, no climbers would even dare think of weathering Akinabalu and if climbers are no longer coming, an entire community that depends on this industry to make a living will be severely effected.

Recently in a conversation with Sabah Chief Minister, Musa Aman, I was told that he had appealed to several high ranking officers from PETRONAS ( a government endorsed oil and Gas conglomerate) to assist with the Sabah Quake victims. A verbal agreement was made between Aman and PETRONAS in which this special fund would serve as their CSR for Sabah. This has yet to take place, but for this assistance to make truly help, it needs to come in soon. Similarly, other successful companies and conglomerates need to come forward in a similar fashion. Anyone who has benefited from Sabah needs to pump resources back to the state immediately.

We can never blame anyone for the Sabah quake. Nature is unpredictable as it is beautiful and what happens within the realm of the natural is completely out of our hands. But what we can take complete control of are the aftermaths, the rehabilitation and and the recovery. If we fail to assist and support where it is needed, then blame is inevitable. Conglomerates, such as PETRONAS who have had the support of so many, need to take time from their busy schedule to realize that those servicing the Mount Kinabalu, a cherished and honored world heritage site, are in need of help. Help needs to come sooner rather than later, through swift action and not as lip service.

this piece was out today in the Sunday Daily Express forum



Politics aside, you could probably count Musa Aman as a rather popular personality. No other state’s population rallies around its Chief Minister as does Sabah for Musa Aman. Sabahans are proud of the national appeal he has, and the bad press that he was given in the early days of his chiefministership does not really matter to them. We must look at why that is.

The first thing we observe is his charisma. He is the most talented politician of his generation, if by talent we mean the ability to attract people to him. The connection he has with his audience is almost unmatched. He is one of the three best communicators in Malaysia, the other two being Anwar Ibrahim and Mat Sabu.

All three men has also been known to combine humour, drama and colloquial speak. All three, and not accidentally either, are entertainers. Performers of high calibre. Musa is very comfortable with large crowds. His quality can only by hinted at to those who don’t understand and speak Sabahan Malay. He speaks Sabahan Malay, touched by the accent of neither the rough parts of Keningau and Beaufort, nor the urban slang of Kota Kinabalu.

The second thing is that he is not a race/religious-based leader. Like Lim Guan Eng and Azmin Ali and unlike Tan Sri Adenan Satem, and Shafie Apdal, or even Salleh Said Keruak, Musa’s electoral popularity does not come from belonging to a community. Musa is a Dusun/Pathan from the Gunsanad family originating from the Sundang, the Sodomon family in Keningau and the Aman family from Beaufort. It is not numerically significant in Sabah in electoral terms, and not a vote-bank he can rely on. In any case he neither makes reference to it, nor does he have the reputation for promoting fellow Dusuns or Muslims. Despite his Dusun background, he has been able to rally around him the votaries of Muslims, which in Sabah are mainly the majority.

The third thing is that he has it together organisationally. His attention to details can be compared to the Former Penang Chief Minister Tun Dr Lim Chong Eu, who was as meticulous in running his everyday administration as Musa is. I have never been admitted to Musa’s office for an appointment a single minute later than scheduled. If he says he will meet you at 8, it will be exactly then when an assistant comes to fetch you from the waiting room.

His fourth quality is the ability to judge which events are likely to be popular, and jargon that will and can capture the imagination. This is an important political talent in a nation where slogans are used everywhere. On admittedly a much smaller scale, in this sense he is like Anwar Ibrahim, who through his career coined words and phrases that did not exist before, such as “Professor Kangkung” and “Pandi Kutti”. Musa’s contribution are things like “Halatuju Sabah”, and “Vibrant Borneo”. He can encapsulate much meaning into a couple of throwaway words. And he can get the media to use them, a sign of success. And it is true that there have been other great organisers who became chief minister of Sabah, like Tan Sri Harris Salleh.

Hence, it is rare that any politician is really able to embody all four elements –charisma, broad appeal, organisational ability, and political talent.

Even the most contentious issue, the 5% oil royalty, which has been a source of unhappiness to every Sabahan since the Petroleum Development Act of 1974 and how Musa a Sabahan views it, is so profound. Musa is certainly aware that it is time to review the oil revenue-or profit-sharing agreement between Sabah, the federal government and Petronas, the national oil company. Presently, the federal government is the sole shareholder of Petronas.

The Petroleum Development Act of 1974 came into play after Petronas signed the first production sharing contracts with Shell, Exxon and other foreign oil companies in 1976. Under a complex mechanism, Petronas sets aside 10% of gross revenue from oil and gas production for cash payments to the federal government and oil-producing states. Out of this money, the federal takes half and the states keep the balance. The Federal Government gets a flat annual dividend of RM 28 billion. Last year it got 30 billion ringgit out of a profit of RM 63 billion. Sabah expects about only RM 800 million in petroleum royalties this year.

But, it receives about four times more than its 5% oil royalty from the federal government for its social and infrastructure development under each succeeding five-year Malaysia plan. Federal grants are estimated at about RM 350 million. The state has got slightly more than RM 10 billion to carry out 424 projects under the first phase of a rolling plan of the 10th Malaysia plan which started last year.

So hear this very carefully, Sabah contributes a little more than a quarter of Malaysia’s crude oil production of about 635,000 barrels a day. Petronas’ profits over the years from Sabah’s oil and gas could be in billions up to now. So, it is not late for The Federal Government to consider more participation of Sabah State Government in Petronas itself which is raking the billions from Sabah. Converting Sabah’s share of oil and gas revenue into equity with Petronas will be very fair. Start with 20%, let Sabah government have 20% ownership in Petronas.

This does not in anyway cause any financial burden to the Federal Government, Petronas will just have to issue share certificates to Sabah State Government and there is no cash transaction. And every year instead of “cash payments” or “royalties”, Sabah would receive dividends as shareholders with Petronas. Besides, Petronas continues to be profitable and is the most diversified company having investments in almost every corner of this world and Petronas is the only company in Malaysia which is a Fortune 500 company. Last year, the conglomerate paid RM 5.4 billion in “petroleum proceeds” to the federal and state governments.

Giving Sabah a stake in Petronas would surely help their integration in Malaysia. After almost 50 years, it is still not too late to start. This would certainly help to diminish Sabahans’ sense of loss of their natural resources.



Last Wednesday, 5th of May, Musa Aman after chairing the State Working Committee on Security at Wisma Innoprise was talking to reporters and refuted the claim that Sabah’s Block L and Block M had been ceded to Brunei Darussalam. Musa also told the press that according to the Sabah Attorney General, (Datuk Rhoderic Fernandez) no Sabah territory has been ceded.

Its kind of strange here. As far as I know, on the 20th Jan 2009, Datuk Rhoderic Anthony Fernandez had resigned as Sabah’s top legal adviser. Datuk Fernandez had even told the press during the civil suit hearing for the Goddess of Sea, Mazu statue, in the High Court, Kota Kinabalu, that he had submitted his resignation to Yang di-Pertua Negri Tun Ahmadshah Abdullah. Datuk Fernandez also told the media that his resignation was due to “personal and family reasons” and he gave the impression that it had nothing to do with Tan Sri Chong Kah Kiat’s suit over the revocation of approval for the Mazu statue by Musa Aman.

So if Datuk Rhoderic Fernandez the Sabah Attorney General had resigned, how come Musa Aman is quoting the Sabah Attorney General Datuk Rodric Fernandez ?  Is this not strange? Musa is saying that he had spoken to Datuk Rhoderic Fernandez the Attorney-General of Sabah regarding the ceding of three million acres of Sabah’s maritime territory namely Blocks L and M by the Federal Government to Brunei Darusalam. When did Musa speak to Datuk AG? Is Datuk Rhoderic still the AG or is there a new AG Musa is referring to? Seems very mysterious. Or was Datuk Rhoderic’s resignation not accepted by the TYT and hence he is still our AG? If not why are we  not told? Why all these secrecy? AG’s position is very important position. The office of the State Attorney-General is a constitutional post and the appointment to the office of the State Attorney-General is made by the Yang di-Pertua Negeri. Musa knows this and I’m sure.

As I said in my earlier article that the ceding of Block L and Block M is unconstitutional because such an act of ceding territory of the State of Sabah in the federation of Malaysia required the consent of the Sabah State Legislative Assembly and the Conference of Rulers and this is stipulated in Article 2 of the Malaysian Constitution.

And according to Datuk Yong Teck Lee the former Chief Minister of Sabah, the only one time that such a consent under Article 2 was given was on March 8, 1984 when the Federal Territory of Labuan Enactment 1984 was passed in the State Legislative Assembly and this caused the downfall of the Berjaya State government headed by Datuk Harris Salleh, then.

I happen to believe that the whole ceding of our territory to Brunei will someday be cited in the history books as one of the worst, most corrupt sleazy, moments in the history of Sabah, and that UMNO and KL have both directly and indirectly encouraged circumstances and events that have put this mess where it is because our government is too stupid, weak and corrupt to do anything other than play along with the bad guys. RM320 BILLION is a lot of money and I think we have been mislead.


An oil producing offshore area, Block M and Block L belonging to Sabah near Brunei in the South China Sea is no longer a part of Sabah. It now belongs to Brunei. This Block M and Block L is close to 6000 square kilometers in size, which is like 10 times the size of Singapore. Both the blocks can produce 1 billion barrels of oil  or US$100 billion in revenue and it belongs to Sabah.

Our Chief Minister from Sabah, Musa Aman together with Abdullah Ahmad Badawi negotiated with the Sultan of Brunei to get back Limbang for Sarawak, in exchange they agreed to surrender this Block M and Block L belonging to Sabah. Can you believe this? Yes, Musa Aman with Badawi,  on march 17th, 2009 in Brunei, had signed away US100 billion dollars of oil to the Sultan of Brunei.

And this was not brought up at all by Musa Aman to the Sabah State Legislative Assembly. More importantly by giving up the Blocks L and M, both Musa  Aman and Pak Lah were altering the boundaries to Sabah, and the Constitution under Clause 2 (b) provides that this will require the consent of the state and as well as the Conference of Rulers.

To give away or demarcate boundaries of Borneo States, Badawi must first consult Parliament, then under the Federation Agreement with Sabah, Badawi must ask Musa Aman to convene an emergency sitting of the Sabah State Legislative Assembly and then take a vote in the  State Assembly. Musa Aman did not just do that.  Musa Aman concealed this whole thing, Brunei, Block M and Block L from Sabahans. This Musa Aman, did not bring this matter to the State Assembly at all and why was he hiding this from Sabahans? Musa Aman owes Sabahans and explanation.

Besides, only if  Sabah had cleared this matter in the assembly, then only, can this be brought to the Agong for a royal consent to the demarcation of the new boundaries. The Conference of Rulers MUST also agree and that too has to come BEFORE the signing of the Agreement with Brunei. But they did not.

Then why was Pak Lah and Musa Aman in a hurry to sign the Agreement with the Sultan? Why the rush? Pak Lah says he has got the approval from his Cabinet and so everything is in order. But is this true? Was the  process done constitutionally, as per the Federation Agreement?

To me this is like TREASON! Musa Aman  should be charged for Treason for concealing, hiding or aiding the crime of TREASON. Musa Aman concealed this action from the Sabah State Assembly, and for any public servant To conceal, hide, or aid the crime of TREASON is to be guilty of the same offence.

The facts are :

1. Malaysia, Sabah no longer has any sovereignty over the 2 areas i.e Block L and Block M.
2. Malaysian oil companies can only participate in jointly developing the areas for 40 years (with Brunei’s permission).
3. Limbang remains a disputed area with Brunei.

I stand by my opinion that Musa Aman and  Abdullah  Badawi should be tried for Treachery and TREASON for losing territory belonging to Sabah, Malaysia.

Then if  the KL boys were to say that the Blocks L & M are not within the Sabah State waters and therefore under the purview of the Federal Government, then I will say, why this not brought to Parliament, and not brought to The Agong, and then to the Conference of Rulers, as we are after all altering the boundaries of the federation? Is it because it comes under the Federal Territory of LABUAN?

Explain lah!

Dato’ Sri Anifah bin Haji Aman, the Malaysian Minister of Foreign Affairs the brother of Chief Minister Datuk Musa Aman, you are the right person, please explain? You and your brother claim fighting for Sabah’s rights, show us lah! Sorry Anifah I have to bring you into this picture although you are just recuperating from a massive attack following surgery to clear blocked arteries in your heart. I hear you are recovering well following coronary bypass surgery in Singapore. I wish you speedy recovery my friend!

Read here my earlier post on this.


I remember during Mahathir’s time the Federal government was trying to sell part of Limbang to the Sultanate of Brunei behind close doors. Somehow the news leaked. There was so much opposition from all quarters during that period of time that the Federal government had no choice but to abort the deal. Never cross my mind, that while everyone one was watching Limbang so closely there was another deal which was struck right under our noses. This time it was a territory belonging to Sabah and not Sarawak and the beneficiary Brunei. An age-old conspiracy was being consummated right under our nose.

See Map below. Block L and Block M belongs to Sabah, Malaysia.

On September 28th, 2003,  there was a production sharing contract for Block L and Block M between U S based Murphy Oil Corp and our Petronas Carigali Sdn Bhd for 250,000-300,000 bpd with a life span of between 15 to 20 years.

But on Wednesday  April 21, 2010, Murphy Oil Corp on its website said Petroliam Nasional Bhd (Petronas) has terminated the production sharing contracts for Blocks L and M as they “are no longer a part of Malaysia”.

It seems Murphy Oil Corp was informed by Petronas following the execution of the exchange of letters between Malaysia and Brunei on March 16, 2009, that the offshore exploration areas designated as Block L and Block M were no longer a part of Malaysia.

“As a consequence, the production sharing contracts covering Blocks L and M, awarded in 2003 to Petronas Carigali Sdn Bhd and Murphy, were formally terminated by letter dated April 7, 2010,” Murphy Oil Corp said.

Wow, how did this happen? How come the Federal Government can give away its territory without the knowledge of its citizens. Can they do it? These two blocks Block M and Block L is close to 6000 square Kilometers. These two blocks can produce 250,000-300,000 bpd and has a life span of between 15 to 20 years. This works out to RM1.19 billion a year and RM17.85 billion over the lifespan of these two blocks. This works out to USD20.5 million or RM65.6 million per day in revenue!

With oil royalty for Sabah at 5%, this means Sabah will lose out RM3.28 million a day.

I am truly shocked. What is actually happening here? Is there a side deal between our politicians and the Brunei Sultanate?

I hate to sound melodramatic but unfortunately the truth may be very bizarre. I want to be wrong because if I am not, it means that the forces responsible for the abuse of power, corruption and you name it, of the last 22 years are still in charge.

What has Musa Aman The Chief Minister of Sabah got to say about this? Come on Musa say something? Are you suffering from a strange fecklessness when it comes to UMNO and the Federal Government  and Sabah’s oil?

Read Here what my good friend from Penang, Romerz got to say about this whole thing..

Read HereThe Government of Brunei’s official website on the Petroleum Concession Areas.

Read Here Murphy Oil Corp’s Termination of Contract For Block M and Block L in Malaysia.


Ku Li today painted a bleak future for Malaysia under the Barisan Nasional government, saying it had squandered the nation’s oil wealth to the tune of billions of ringgit.

The former Finance Minister said Petronas’s oil profits had been 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,” the first Petronas chief and former Umno vice president said in a speech at the Young Corporate Malaysians Summit.

He said Petronas money had been used as a slush fund to prop up authoritarian rule, to corrupt the entire political and business elite and to erode constitutional democracy.

The Gua Musang MP told the conference that Petronas had contributed 40 percent to the national budget over the years. But such a great reliance on oil income was getting untenable, he said. “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.”

Ku Li said the future for Malaysians looks bleak with the government seeking to broaden the tax base by introducing a goods and services tax (GST), requiring Malaysians to pay an additional tax on top of income tax. 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, Tengku Razaleigh added.

Following is the text of his speech: In a speech I made in April this year, I spoke of where we stand in our developmental path and what I felt we must do to move forward. I need to revisit that argument in order to develop it further.

We are stagnating. The signs of a low-growth economy are all around us. Wages are stagnant and the cost of living is rising. We have not made much progress in becoming a knowledge and services based economy.

According to the World Bank, Malaysia’s share of GDP contributed by services was 46.2 percent in 1987. Ten years later, that share had grown by a mere 0.2 percent. Between 1994 and 2007, real wages grew by 2.6 percent in the domestic sector and by 2.8 percent in the export sector, which is to say, they were flat over that 13-year period.

Meanwhile, our talent scenario is an example of perverse selection at its most ruinous. We are failing to retain our own young talent, people like yourselves, let alone attract international talent to relocate here, while we have had a massive influx of unskilled foreign labour. They now make up 30 to 40 percent of our workforce.

Alone in East Asia, the number of expatriate professionals here has decreased. Alone in East Asia, private sector wage increases follow government sector increases, instead of the other way around. We are losing doctors and scientists and have become Southeast Asia’s haven for low-cost labour. I said that we are 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. Regional competitors with larger, cheaper – and dare I say – hungrier labour forces have emerged. China and India have risen as both lower cost and higher technology producers, and with giant domestic markets.

The manufacturing sector which propelled the growth we enjoyed in the 90s is being hollowed out. There is no going back, there is no staying where we are, and we do not have a map for the way forward. I am glad that the characterisation of Malaysia as being in a ‘middle-income-trap’ has been taken up by the government, and that the need for an economic story, or strategy, for Malaysia is now recognised. We stand in particular need of such a model because we are a smallish economy.

We cannot be good at everything, and we don’t have to be. We need only make some reasonable bets in identifying and developing a focused set of growth drivers. It is not difficult to see what the elements of such a growth strategy might be.

Whatever we come up with should build on our natural strengths, and our strengths include the following:

+ We are located at the crossroads of Asia, geographically and culturally, sitting alongside the most important oil route in the world.

+ We have large Muslim, Chinese and Indian populations that connect us to the three fastest growing places in the world today.

+ We have some of the largest and oldest rainforests in the world, a treasure house of bio-diversity when the greatest threat facing mankind as a whole now is ecological destruction, and the greatest technological advances are likely to come from bioscience.

+ We have the English language, a common law system, parliamentary democracy, good schools, an independent civil service and good infrastructure.

These advantages, however, are declining. Our cultural diversity is in danger of coming apart in bigotry, our rainforests are being logged out and planted over, our social and political institutions are decaying.

I have spoken at length on different occasions about the causes and consequences of institutional decline. The decline in our society, and indeed in our natural environment, originates in a decline in our basic institutions. The link between these is corruption.

The destruction of our ecosystem, for example, is made possible by corrupt officials and business people.

The uncontrolled influx of unskilled labour is a direct result of corruption. These are problems we need to be aware of before we speak glibly about coming up with new strategies and new economic models. We need to understand where we are, and how we have gone wrong, before we can set things right.

You are young, well-educated Malaysians. Many among you have left for other shores. Record numbers of Malaysians, of all races, work abroad or have emigrated. Among these are some of our best people. They sense the stagnation I described. There is a certain lack of energy, ingenuity and “hunger” in the climate of this country that young people are most sensitive to. In the globalised job market, young people instinctively leave the less simulating and creative environments for those that have a spark to them.

How did we lose our spark as a nation? We have a political economy marked by dependence on easy options and easy wealth. Like personal dependencies, these bad habits provide temporary comfort but discourage the growth of creativity and resilience.

I mentioned our dependence on low-cost foreign labour. The other dependence is something I played a part in making possible.

This is a story I want to leave with you to ponder in your deliberations today.

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 70s, 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 prime minister on how to conserve that oil and use it judiciously 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 manufacturing to a more diverse economy based on high income jobs. Aware that we had an insufficient tax base to make the capital investments needed to make the leap, we planned to apply oil royalties to what you would call today strategic investments in human capital.

Whatever money left after making cash payments, allocations for development funds, etc, was to be placed in a Heritage Fund for the future.

The Heritage Fund was for education and social enrichment. In working out the distribution of oil between the states, who had sovereign rights over it, and the federal government, we were guided by concerns for equity between all Malaysians, a concern to develop the poorer states (who also happened to be the oil rich states) and a concern for inter-generational equity. That oil was for special development purposes and it was not just meant for our generation.

Sabah and Sarawak joined Malaya to form Malaysia because of the promise of development funds.

Yet today, despite their massive resources, they are some of our poorest states.

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 palm oil estates.

Instead of helping eradicate poverty in the poorest states, our oil wealth came to be channeled 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.

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.

It is no wonder that we are no longer productive, no longer using our ingenuity to devise ways to improve ourselves and leap forward. Malaysia is now an “oil cursed” country. We managed to arrive at this despite not having a lot of oil.

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.

The story I have told is a reminder of the scale of the challenge of development. My generation of young people faced this challenge in the 60s and 70s. You face it now. The story tells us that development is about far more than picking strategies out of a box. You have kindly invited me to address a seminar on strategies for reinventing and liberalising Malaysia’s economy. But the story of our squandered oil wealth reminds us that it was not for want of resources or strategies that we floundered.

Our failure has been 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.

The Malaysia we need to recover is one that was founded on laws and led with integrity.

With the hindsight of history we know such things are fragile and can be overturned in one generation, forgotten the next. Without a living foundation in the basics, you might sense an air of unreality around our talk of reinventing ourselves, coming up with “a new economic model” and liberalising our economy. So before we can reinvent ourselves, we need to reclaim 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.