PETRONAS to cut spending by RM50 bil over 4 years
|PETRONAS out of gas?|
Over the week, Wall Street Journal reported that Petroliam Nasional Bhd (Petronas) plans to slash as much as 50 billion ringgit ($11.4 billion) in capital and operating expenditure over the next four years, according to an internal memo sent to staff by its chief executive officer.
Petronas is the Malaysian government’s biggest source of revenue, covering as much as one third of the annual budget, even after cuts in subsidies and the introduction of new taxes to diversify sources of income.
Petronas confirmed that it had circulated the memo as part of “ongoing efforts to optimize costs to address the impact of the continuous fall in crude oil prices.”
The firm has been hit by a slump in oil prices, which have fallen over 70% over the past 18 months.
BANK NEGARA RESERVES FALL TO US$95.1 billion
Bank Negara Malaysia's international reserves fell by a marginal 0.21% to US$95.1 billion in the first two weeks of January 2016. The ringgit has been hit by the volatile Chinese markets at the start of the year. They stood at a five-month high of US$95.3 billion as at December 31st, 2015. The central bank issued a statement saying that the reserves position is sufficient to finance 8.5 months of retained imports and 1.1 times the short term external debt.
SRR cut to 3.5% by Bank Negara, keeps OPR
Bank Negara Malaysia kept its key overnight policy rate (OPR) at 3.25% last Thursday but announced a 50bps cut in the statutory reserve requirement (SRR) ratio for banks to 3.5%, effective 1st of February, following the monetary policy committee meeting. The objective is to ensure sufficient liquidity in the domestic financial system. The reduction in SRR is the first since July 2011.
Bankers and analysts say the cut will release some RM6 billion into the banking system. While it may be a relatively small amount, it sends a message to the market that the central bank is taking steps to address perceived tight liquidity in the industry.
AUTOMOBILE INDUSTRY'S 2016 FORECAST FALL
The Malaysian automotive industry hit record sales in 2015 but the projection for 2016 by Malaysian Automotive Association (MAA) will fall. The industry volume this year is expected to fall by 2.5% amid local and external economic headwinds, before a rebound in 2017. MAA's latest forecast for 2016 is 4.83% or 33,000 units lower than its earlier forecast of 683,000 units in July last year.
THE POLITIC GAME CONTINUES: THIS TIME AGAINST MUKHRIZ
The party's crisis in Kedah, where certain division leaders are demanding the ouster of Menteri Besar Datuk Seri Mukhriz Mahathir is getting the headlines last week, and UMNO President Datuk Seri Najib Razak had a discussion over it in Putra World Trade Centre (PWTC), according to The Edge Weekly.