PETALING JAYA: While welcoming Petroliam Nasional Bhd’s (Petronas) announcement to increase its dividend payout to the government to RM24 billion this year, economists said the move was timely but cautioned the government against depending heavily on dividends to bolster its finances as Petronas’ performance is subject to movements in crude oil prices.
Last Thursday, Petronas, which previously said that it will be paying out RM19 billion in dividends to the government of Malaysia, its sole shareholder, decided to increase the dividends by RM5 billion. Last year, Petronas’ dividend payout amounted to RM16 billion.
Sunway University Business School professor of economics Dr Yeah Kim Leng and Socio-Economic Research Centre executive director Lee Heng Guie agreed that the announcement comes at the right time to offset the revenue shortfall that could arise from the transition from the goods and services tax (GST) to the sales and service tax.
However, both agreed that the government should not only bank heavily on Petronas’ dividends as the amount would vary depending on crude oil prices and should remain prudent with its spending.
Noting that the dividend has helped Malaysia “escape” from the instance of widening its fiscal deficit gap, Yeah said the fiscal deficit target of 2.8% to gross domestic product this year is within reach.
“The question is whether the oil price will stay high next year or not, because you must understand while the government takes more from the oil revenue, dividend or income tax they also stabilise petrol prices at RM2.20 a litre for RON95.There is offset here and there. You know you gain more from revenue but you also have to pay for a subsidy,” Lee said.
He believes the government will remain disciplined in its expenditure.
Petronas’ net profit stood at RM13.6 billion for the April-June period against RM7 billion in the same period last year, underpinned by higher revenue, lower net impairment on assets and other expenses. Revenue for the period grew 15% to RM59.2 billion from RM51.6 billion.
For the first half of the year, the oil major’s net profit soared 54% to RM26.6 billion from RM17.3 billion, while revenue increased to RM117.2 billion from RM108.1 billion.
Source: The Sun Daily