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ISSUANCE OF PETRONAS BONDS: AN ASSESSMENT OF ITS ECONOMIC IMPACTS

Suarddy Bin Parman
Faculty of Economic and Administrations
University Malaya
Kuala Lumpur, Malaysia

Abstract
This study is to analyze the issuance of PETRONAS bonds and the assessment of its impact to Malaysian economy. The study shows that the oil shock has negative impact to the Malaysian economy. The government is no longer afforded to bear an increasing oil subsidy. Thus, we proposed the PETRONAS oil bonds and we developed a model known as PETRONAS Bonds Function (PB-Function) as the alternative to subsidy. The model applies the mathematical modeling in real time, information technology, network system and Econographicology. This study, we also use an advance geometry surfaces to see the movement of oil price and the relationship of oil bonds and subsidy. We found that there is an inverse relationship between subsidy and PETRONAS oil bonds. If the oil market prices increase, the government capability to subsidize the domestic oil price will decrease. Therefore, the government will issue the PETRONAS oil bonds to accommodate the differences between subsidy level and current oil prices. Thus, government is capable to offer lower prices of oil. However, if the oil market prices decrease and the government capable to subsidize the oil prices, therefore, the government does not have to issue PETRONAS oil bonds.

Keywords: Malaysian Petroleum Industry, PETRONAS Bond Function, economic mathematics, multi-dimensional surfaces, oil bonds, oil subsidy.
JEL: G18