Petronas-Saudi Aramco Deal Sends Positive Signal To Global Investors

The strategic US$7 billion (US$1 = RM4.45) deal between Petroliam Nasional Bhd (Petronas) and Saudi Arabian Oil Co (Saudi Aramco) sent a significant signal to the market that Malaysia’s long-term investment climate is conducive.

International Quality Investments Holdings (IQI)’s Chief Economist, Shan Saeed, said the deal spread a positive message to global investors for investment about Malaysia’s economic and financial stability and strong confidence in the government.

“Prime Minister Datuk Seri Najib Tun Razak has shown remarkable diplomatic and economic brinkmanship by getting the second biggest investment after China in less than five months, thus putting the government on a strong footing.

“This investment will bolster the government’s balance sheet and bring about stability in the ringgit going forward,” he told Bernama.

Under the deal, Saudi Aramco would acquire a 50 percent equity in Petronas’ Refinery and Petrochemical Integrated Development’s refinery and cracker assets.

It would also supply up to 70 percent of the crude feedstock requirement of the refinery, with natural gas, power and other utilities supplied by Petronas.

According to IQI’s global market intelligence report, Shan said, Malaysia continued to be on the global investors’ radar.

“This is due to economic confidence, strong aggregate demand, educated labor force and modern infrastructures which have direct correlation with gross domestic product (GDP) growth,” he said.

He said most global investors picked Malaysia due to its geographical importance with the Straits of Malacca playing the major role.

“About 80 percent of China’s trade passed through the straits,” he said.

Shan said Malaysia’s GDP for 2017 would trend between 4.3 and 4.7 percent which was much higher than many European countries’.

Malaysia, Vietnam and the Philippines would be the leading economies of the ASEAN region for the next two-five years, he said.

“ASEAN would emerge as the fastest-growing economic bloc with higher per capita income and improved living standards for the masses,” he said.

This article was sourced from

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