UK executives question KL petrol station move

UK executives question KL petrol station move

KUALA LUMPUR (Reuters): Malaysia's decision to stop giving licenses to foreign oil companies to open new petrol stations in the country could deter foreign direct investment, the head of a British trade delegation said on Monday.

Last week's decision by the Malaysian cabinet not to issue more licenses shocked foreign oil companies, which have been aggressively expanding their retail operations in the country.

Market analysts said that apart from lost investment of the oil firms, the government's move would jolt foreign investor confidence at a time when domestic growth was slowing.

"It's that sort of restriction, that sort of introduction of a policy, which obviously one has to decide (if) it's going to spread into other areas of business," Jeremy Hanley, Chairman of International Trade and Investment Missions told a news conference.

"One doesn't want what you would call creeping nationalization because that generally is a disincentive to foreign direct investment," said Hanley, who was a minister in the British Conservative government which lost power in 1997.

Hanley was part of a British delegation intent on building bilateral trade from the $4.7 billion registered between the two countries in 1999, with industries related to Malaysia's extensive oil and gas reserves high on the group's agenda.

Malaysia's Domestic Trade and Consumer Affairs Minister Muhyiddin Yassin was quoted by a local newspaper last week as saying no petrol firms except state oil firm Petronas would now be allowed to expand in the country.

He said the government would determine later plans to reduce in stages foreign petrol companies' share of the market.

Royal Dutch/Shell, Exxon Mobil, BP Amoco, Caltex and Conoco

have a total of 2,024 petrol stations in the country, while state oil firm Petronas has about 500.

Conoco, the newest player in Malaysia's petrol retail sector, has said it planned to invest about one billion ringgit ($263 million) to build 150 petrol stations in the next 10 years.