Saudi investment a confidence vote in Malaysia: Najib

King Salman and Prime Minister Najib at a ceremony yesterday to mark the signing of memorandums for cooperation on economic, labour, science and education issues.
King Salman and Prime Minister Najib at a ceremony yesterday to mark the signing of memorandums for cooperation on economic, labour, science and education issues.PHOTO: REUTERS
Part of the King's cargo includes a mobile escalator to descend from his jet.
Part of the King's cargo includes a mobile escalator to descend from his jet.PHOTO: AGENCE FRANCE-PRESSE

$10b refinery project used to fend off criticism of earlier China deals

Saudi Arabia's US$7 billion (S$9.8 billion) investment in Malaysia's ambitious Pengerang Integrated Petroleum Complex (PIPC) has given Malaysian Prime Minister Najib Razak a fillip against detractors criticising his closeness to China.

Riyadh's national oil company, Saudi Aramco, will pour in the funds to set up an oil refinery in the eastern Johor complex, Datuk Seri Najib told a press conference yesterday, after a bilateral meeting with King Salman Abdulaziz Al Saud during the Saudi leader's first state visit to a South-east Asian nation.

"You can see that Malaysia has got very good relations with many countries. When we went to China, we were accused of selling our sovereignty. I wonder, are they going to say we sold our sovereignty to Saudi Arabia," Mr Najib said.

"It's not a question of sovereignty, but about investments which would be good for us. It would bring in foreign capital, strengthen the ringgit in the medium term. It will also mean more jobs and a strong vote of confidence in our economy."

Although the Prime Minister refused to divulge further details, it is understood that Saudi Aramco will sign a share purchase agreement for Petronas' Refinery and Petrochemical Integrated Development (Rapid), which makes up the bulk of PIPC.

Rapid came with a RM60 billion (S$19 billion) price tag when first announced, meaning that the deal could see the two energy giants being close to equal partners in the project.

  • The royal tour

    King Salman is on a month-long tour of Asian countries that include Malaysia, Indonesia, Brunei, Japan and China. His travel arrangements include:

    •An entourage of 600 in Malaysia, comprising the royal household and Cabinet ministers;

    •Booking three luxury hotels and 100 cars in Malaysia;

    •An entourage of 1,500 when he visits Jakarta and Bali;

    •His own mobile escalator, to descend from his private jet to the airport tarmac;

    •Flying in two personal limousines into Malaysia;

    •Airfreighting 459 tonnes of cargo to Indonesia, including two Mercedes-Benz S600 limousines to Jakarta; and

    •A well-deserved two-week holiday in the Maldives at the end of his tour, with three resorts reserved for his stay.

    REUTERS, ASIA NEWS NETWORK

Details will be made public later today, when Malaysia's state-owned petroleum company inks the deal with its Saudi counterpart.

Mr Najib said that the deal made Saudi Aramco "the single largest investor" in PIPC.

His political opponents, led by former premier Mahathir Mohamad, have recently accused him of selling the country, after he returned from a week-long visit to Beijing last November and announced that China would invest in RM144 billion of projects in Malaysia.

Among the most controversial deals is the East Coast Rail Line, which critics say will be built at an inflated cost of RM55 billion.

Mr Najib's critics have pointed out that the railway line - stretching from the Klang Valley on the west coast to Kelantan state in the north-east - will be financed by a loan from China, meaning that Malaysian taxpayers will eventually be saddled with the bill.

Saudi Arabia has been a strong supporter of Mr Najib, who has faced continued accusations of graft over the US$700 million found in his personal accounts, allegedly linked to troubled state firm 1Malaysia Development Berhad.

Riyadh has backed his claims that the money was a political donation by Saudi royals ahead of Malaysia's general election in 2013. 

Both countries have hailed "the best-ever relations" between their Muslim-majority nations during King Salman's four-day visit, which marks the start of the King's month-long Asian tour. 

Mr Najib also told reporters that Saudi Arabia "has responded positively" to Malaysia's request to further increase its haj quota, having seen the allocation grow to 27,900 pilgrims this year.

After yesterday's bilateral meeting, the two countries signed memorandums of understanding to further cooperate on economic matters, labour, science and education.

"An MOU was signed for economic cooperation and hopefully there would be more projects that we can undertake in Saudi Arabia," Mr Najib said, citing the metro line between Mina and Mudzalifah near Mecca, operated by state-owned Prasarana Malaysia.

Malaysia's total trade with Saudi Arabia increased by 28 per cent to almost RM14 billion last year, from close to RM11 billion in 2015.

A version of this article appeared in the print edition of The Straits Times on February 28, 2017, with the headline 'Saudi investment a confidence vote in Malaysia: Najib'. Print Edition | Subscribe