PETALING JAYA: An expected lower dividend payout by Petroliam Nasional Bhd to the government next year from the RM54 billion this year is not a cause of concern for economists.
“A return to normal levels of dividend contribution from Petronas is not expected to be an issue, as the special dividend payout of RM30 billion (for 2019) was meant to offset a one-off RM37 billion Goods and Services Tax and income tax refunds,” TA Securities head of research Kaladher Govindhan told theSun.
For the first half of 2019, the Malaysian state-owned oil company reported a dated Brent crude price of US$66.02 per barrel (pb), a 6.4% drop from the realised price of US$70.56 pb reported for 2018.
In the previous budget, the government forecast an average oil price of US$70 per barrel (pb) and according to market consensus, for every dollar difference in the realised oil price will translate into a RM300 million difference to the government’s budget.
Kaladher said even if the Brent crude price were to drop to US$63 pb, this would translate into a shortfall of RM2.1 billion, which is not a big impact.
His view is shared by Sunway University Business School Professor of Economics Dr Yeah Kim Leng.
Yeah explained that the special dividend was an one-off item and the government is not expected to further burden Petronas with another special dividend as it would interfere with the oil major’s capital expenditure, which it requires to sustain growth.
“However, in the event of a sharper-than-expected slowdown in the global economy, we do not rule out the possibility of a dividend from Petronas to assist the government to pump prime the Malaysian economy,” said Yeah.
World Bank president David Malpass has said that the global economy is poised to decelerate more than previously estimated, with the pile of negative-yielding debt indicating growth will be slower in the future.
Yeah foresees Brent crude to trade within the US$65-70 pb range for the year and is hopeful that it would provide a sufficient revenue for Budget 2020.
For the upcoming budget, he stressed the importance for the government to deliver improved fiscal deficit numbers to prove Malaysia’s commitment to tackle the deficit.
“If there is a shortfall in the budget, the gap could be addressed by other government-linked companies or through the selling of government assets, which will not affect Malaysia’s long-term fiscal sustainability,” said Yeah.
