5.3.3 Policy Channels
In Malaysia, LCPs related to the oil and gas sector derive from:
The Petroleum Mining Act of 1966 The Petroleum Development Act of 1974 Petroleum-sharing contracts The Companies Act 1965 The Economic Transformation Program 2010.
5.3.4 Institutional Responsibilities
Local-content-related institutional responsibilities are mainly split between Petronas, the MPRC, and the MIDA. Petronas has two dedicated units responsible for the design and implementation of local-contentrelated initiatives: the supply chain management unit and the unit of education. Pemandu was established under the prime minister’s office in 2009 with an objective to drive progress and oversee the delivery of the Government Transformation Programme and the ETP (Pemandu 2012). Additionally, Pemandu’s role is to support other governmental entities in the planning process and delivery of objectives and to report performance and progress to the prime minister and other ministers. In relation to OFSE, Pemandu oversees and reports on the progress of the three ETP initiatives. The MPRC was created in April 2011 as a permanent government agency under the prime minister’s office. The agency started its operations in July of 2012 with an overall objective of transforming Malaysia into the leading regional hub for OFSE by 2017. The agency’s key responsibilities include:
Recommending a restructuring road map for the domestic OFSE industry to increase its competitiveness and set it on a growth path Overseeing OFSE activities and coordinating cluster activities Creating an attractive environment for multinationals through streamlining administrative processes and developing attractive incentives Promoting the local OFSE industry.
At this point, the agency has a board of four members representing the government, Petronas, and the MIDA. The MPRC is foreseen to comprise of 20 full-time employees with an expected annual operating budget of RM 5 million and a capital requirement of RM 6.8 billion to ensure the success of its mission. The agencies work engages the different industry stakeholders including government agencies, financial institutions, and domestic and foreign oil and gas companies. 5.3.5 Interlinks
As discussed earlier, the LCPs in the oil and gas industry are part of the country’s economic development plan. Thus, there is a high interlink between the sector-specific policies and other sectoral and cross-sectoral policies. In fact as per the ETP, there are six cross-sectoral strategic reform initiatives, four of which are relevant to the backward link of the petroleum sector:
Implementation of competition laws, adoption of international standards, and a liberalization of the services program shall all contribute to making local industries competitive in the international arena and attract FDI Reforming of public finance through the adoption of efficient broad-based taxes and reforming of fiscal policies and institutions Improvement of the performance of public services, and transformation of the role of the government into a lean, efficient, and facilitative one Development of the country’s human capital Streamlining of the government’s role in business.
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