TWR | UPDATED AUGUST 31, 2015 12:07 AM ET:- Ratings agency Moody's Investors Service said last week Malaysia "needs" to be rated at a higher level, after local media questioned why the firm had maintained an outlook on Malaysia perceived as rosy, despite other prominent agencies indicating a more guarded view on the country's sovereign credit.

The Malaysian government has assembled a team of top flight economists and financiers to tackle the economic mess the country has fallen into, following the 1MDB saga, the RM2.6bn donation shocker and the nosediving ringgit. 

On his appointment as one of the members of the emergency economic committee, CIMB Group CEO Nazir Razak, in a post on Instagram, said:"Expected a new committee, but not with me in it! Anyway, will speak truth to power, hope it will help Gov't to steer the economy through this turmoil, and lessen the pain". 

The aim of the committee is to deal with the ringgit, which has fallen to 17 year lows amid investor flight. 

It will consist of 11 members, and will be headed by Economic Planning Minister Wahid Omar, formerly Maybank CEO. 

Nazir, who is the Prime Minister of Malaysia's Najib Razak's brother, has been critical of 1MDB, the debt-laden state investment firm. 

Najib is the chairman of the 1MDB board, and has resisted calls to sack the entire board by his former deputy PM Muhyiddin Yassin. Yassin was subsequently sacked from his post in July, and has since led a low profile campaign focussed on the 1MDB's debts, the billions in donation in Najib's personal private banking account and the lackluster leadership within Umno. 

The Special Economic Committee (JKE), PM Najib said, will develop immediate and medium-term plans to strengthen Malaysia's fundamentals, this after insisting only last week that the country's economic fundamentals were strong. 

"This fits the pattern. The government has been in denial of the deteriorating economic situation since the fall of the Crude Oil Prices, and the subsequent fall of the ringgit.
 "They insisted the economy was strong, resilient and powerful, giving a false sense of security to the people. And now this," said Cordoba Ali, a political analyst who is also a contributor to The Week Review.

The list of 10 corporate and economic leaders did not get the unanimous support of the regime's critics, with some arguing that the absence of Bank Negara Governor Zeti Aziz in the line up is a mistake, while others pointed out there were no women economists or corporate leaders on board. 

"Don't tell me this is an anti-feminine unit, composed of filthy rich men who forms part of the oligarch," said Cordoba. 

Others suggested that Rafidah Aziz should have been appointed to the committee. Rafidah was the minister for international trade and industry under the Tun Mahathir Mohammad and Abdullah Badawi regimes. 

Known as the 'iron fist' lady during her ministerial days, she would have been a good addition to the otherwise anti-feminine list of capitalists, said Cordoba.

 "There are probably limits to what the committee can do, as a large part of the (stocks) sell-off reflects the politics and 1MDB," said Chua Hak Bin, economist at Bank of America Merrill Lynch. 

Chua, who spoke to Reuters, said the absence of central bank governor Tan Sri Dr Zeti Akhtar Aziz was "disturbing" and would limit the committee's options in reviewing economic policies.

He added the absence of Bank Negara on the committee would limit its access to policy options. 

Nevertheless, Cordoba said some of the members of the committee might just quit if the government did not listen to their advice. 

Among those he tipped as potential candidates to leave the emergency committee are Najib's brother Nazir, Andrew Sheng, a Malaysian who is chief advisor to the China Banking Regulatory Commission and Prof Datuk Dr Noor Azlan Ghazali, vice-chancellor of National University of Malaysia. 

Rosli Yaakop, a former deputy manager of Bank Negara's economic department, said the formation of the committee was “late”, and issues with the economy had already reached “an advanced stage.” “Forming it now has only proven that the current administration has been in denial syndrome”, Rosli said in an interview published on The Malaysian Reserve yesterday.
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By The Week Editors

Malaysia's oil giant is in trouble. 

Petroliam Nasional Bhd or Petronas, the Malaysian national oil giant, may be forced to implement further cost cutting and savings that could impact the mega projects it is pushing across the border with Singapore and in the heartlands of Canada amid setbacks in Ireland.

Petronas is already facing an uphill battle in its Canadian venture in the Pacific NorthWest liquefied natural gas project in British Columbia, where the US$29 billion project has come under attack from aboriginal groups.

The Malaysian company is still waiting for approval from environmental regulators, while the Lax Kw’alaams First Nation Band rejected an offer of US$766 million on the basis that the project’s terminal site would endanger precious salmon habitats.

In Johor, the US$16 billion RAPID refining and petrochemical complex within the Pengerang Integrated Complex (PIC), of which the start-up has already been delayed for the third time since its launch in 2012, currently pushed to the middle of 2019.

The slide in oil prices, which started over the past year and with no sign of relief this year, forced Petronas to review and re-bid some of its engineering, procurement and construction contracts (EPC).

Petronas CEO Wan Zulkifli said earlier in May that the company was on a cost-cutting move — which impacted RAPID — and has slowed down some of its petrochemical projects.

Now, questions abound as to whether the mega projects will face further cuts, that will mean delays and resizing, while the Pacific NorthWest deal depends entirely on the Canadian authorities political will to approve the project.


In May this year, Petronas announced that the RAPID complex will cost RM89 billion to be developed, compared with its original price tag of RM97 billion.

The PIC has been envisioned as the next regional downstream oil and gas industrial hub.

With the persistent woes in the industry, it is not impossible that the project cost may be further lowered under Petronas new cost cutting move.

In Canada, Petronas may end up selling more shares in the project, in order to boost its international revenue.

Petronas’ subsidiary PSE Seven Heads failed to discover commercial quantities of gas in Midleton well offshore Ireland, according to partner Landsdowne Oil & Gas.
A Petronas gas station in Thailand. WikiCommons

PSE Seven Heads, a subsidiary of Petronas’ PSE Kinsale Energy it acquired in 20019, reached target depth in the well in the Celtic Sea at 3393ft true vertical depth below sea level, reported the oedigital.com industry portal.

The Midleton prospect, about 20km northeast of the Kinsale Head field, had been estimated to contain 330 Bcf gas initially in place, according to Landsdowne, which seen its share price tank since the announcment.

Kinsale Energy has been producing natural gas from its facilities off the Old Head of Kinsale since 1978.

Kinsale Energy also operates Kinsale Head, Ballycotton and Seven Heads gas fields in the Celtic Sea and a natural gas storage field (Southwest Kinsale).

Yesterday, CEO Zulkilfi said cost savings reached 600 million ringgit in the first half of 2015, and that oil prices will likely remain low for the rest of the year.

Petronas reported its first quarterly loss in five years at the end of last year, but returned in the black in January-March.

In February, the firm said it would cut capital expenditure by 15 percent this year to cope with lower oil prices, and its dividend to the government by around 10 percent.

Petronas has set the price factor for Malaysian Crude Oil (MCO) for August at $3.90 per barrel, down $1.10 from the previous month, a source with direct knowledge of the matter said on Friday.

Petronas introduced a new official selling price (OSP) for its crude based on a basket of Malaysian crude oil grades Labuan, Miri Light and Kikeh effective January 2014.

Profit was lower at RM11.1 billion this quarter or 47% down from the corresponding quarter last year, while revenue declined 7% quarter on quarter and the local giant oil producer digs deep into its reserves to honor its commitments to the Malaysian government.

Petronas, Malaysia’s only Fortune 500 company, on Friday said cash from operations will cover not capital expenses and will not permit it to pay its committed dividends for 2015.

This, the company said, is forcing it to draw on reserves and further cost savings, a situation that is unprecedented for the company.

US light crude oil fell 29 cents to US$41.94 and Brent was down 28 cents to US$48.94 yesterday.

Malaysia’s Petroliam Nasional Bhd (Petronas) may put more emphasis on cutting extra workforce or downsizing its exploration division even further, in the wake