A political economy of national oil companies and late industrialisation: the case of PETRONAS and supplier development in Malaysia
Charlotte Huebner (SOAS)
Paper short abstract:
This paper examines the role of a state-owned oil company in developing local supplier firms, focusing on the case of PETRONAS in Malaysia. Drawing on fieldwork, it shows how PETRONAS's commercial and developmental missions have simultaneously nurtured and disciplined successful supplier firms.
Paper long abstract:
This paper explores the role of a state-owned National Oil Company (NOC) in resource-based industrialization. Departing from the macroeconomic relationship between oil and industrial development, it examines how and why a NOC shapes the emergence, growth and performance of domestic oil and gas supplier firms in the context of late development, focusing on the case of PETRONAS in Malaysia. Much scholarly attention has been given to local content policies and the opportunity and challenges of firm upgrading in the supply chains of International Oil Companies (IOCs), yet the role of a NOC as a developmental catalyst for domestic supplier development remains largely unexplored. Petronas has selectively nurtured domestic oil service companies through the allocation of learning rents to domestic bumiputera-owned companies via licensing, procurement system and Vender Development Programme. In its dual role as industry regulator and oil company with monopoly rights, it has further created competition and discipline in the domestic market with varying outcomes for firm performance. This paper looks into Petronas's corporate history and its institutional set up in the context of Malaysia's political economy and implications for Malaysia's supplier industry.
- Transnational political economies of development