Petronas Twin Towers
Petronas, short for Petroliam Nasional Berhad, is a Malaysian owned oil and gas company that was founded on August 17, 1974. Wholly owned by the Government, the corporation is vested with the entire oil and gas resources in Malaysia and is entrusted with the responsibility of developing and adding value to these resources. Petronas is ranked among Fortune Global 500's largest corporations in the world. In 2008, Fortune ranks Petronas as the 95th largest company in the world. It also ranks Petronas as the 8th most profitable company in the world and the most profitable in Asia.
Since its incorporation Petronas has grown to be an integrated international oil and gas company with business interests in 31 countries. As of the end of March 2005, the Petronas Group comprised 103 wholly owned subsidiaries, 19 partly-owned outfits and 57 associated companies. Together, these companies make the Petronas Group, which is involved in various oil and gas based activities. The Financial Times has identified Petronas as one of the 'new seven sisters': the most influential and mainly state-owned national oil and gas companies from countries outside the OECD.
The Group is engaged in a wide spectrum of petroleum activities, including upstream exploration and production of oil and gas to downstream oil refining; marketing and distribution of petroleum products; trading; gas processing and liquefaction; gas transmission pipeline network operations; marketing of liquefied natural gas; petrochemical manufacturing and marketing; shipping; automotive engineering; and property investment.
Petronas built the Petronas Twin Towers (opened 1998), the tallest twin towers and once the world's tallest buildings, as its headquarters.
Meanwhile the federal government turned to Esso, Continental Oil, and Mobil, licensing exploration off the state of Terengganu, in the Malay Peninsula, the most populous region and the focus of federal power. By 1974, however, only Esso was still in the area. It made its first discoveries of natural gas in that year and then rapidly made Terengganu a bigger producer of oil than either Sarawak or Sabah. By 1974, Malaysia's output of crude oil stood at about 81,000 barrels per day (12,900 m³/d).
Setting Up a State Company: 1970s
Several factors converged in the early 1970s to prompt the Malaysian government into setting up a state oil and gas company, as first proposed in its Five Year Plan published in 1971. These were years in which power in the world oil industry began to shift away from the majors, which then controlled more than 90% of the oil trade, toward the Organization of Petroleum Exporting Countries (OPEC), as well as a proliferation of new private and state companies joining in the search for reserves. By 1985, the majors, reduced in number from seven to five, were producing less than 20% of the world total. It seemed that Malaysia would either have to join the trend or continue to leave its oil and gas entirely to Royal Dutch/Shell and Esso, multinational corporations necessarily attuned to the requirements of their directors and shareholders, rather than to the priorities the government of a developing country might seek to realize.
Further, an agreement between Malaysia and Indonesia, signed in 1969, had settled doubts and disputes about each country's claims over territorial waters and offshore resources at a time when both were heavily indebted to Organization for Economic Co-operation and Development (OECD) governments and banks as well as to the International Monetary Fund (IMF) and the World Bank. Setting up a state oil and gas company, through which the government could get international capital but avoid tangling with foreign oil companies or governments, had worked for Indonesia: why not for Malaysia as well? The oil crisis of 1973–74 made the government even more aware of Malaysia's dependence on foreign oil and foreign capital in general.
Another factor in the decision was that the technology had recently been developed for extensive exploration and drilling offshore. The local geography included a combination of broad basins of sedimentary rock with calm and shallow waters around the Sunda Shelf, making exploration for gas and oil relatively easier and more successful than in most areas of the world. Malaysian crude turned out to be mostly high quality with low sulfur content.
A final and crucial factor in the creation of Petronas, and its continuation in much the same form since, has been the political stability of Malaysia. Since the restoration of parliament in 1971, the country has been ruled by the National Front (Barisan Nasional), the heirs to the Alliance Party which had been dominant from 1957 to 1969 and the originators in 1971 of the New Economic Policy, which was designed to improve the economic position of Bumiputras—native Malays—relative to Chinese and Indian Malaysians and to foreign corporations. The difficulties this policy has caused for foreign companies and investors are outweighed by the benefits they believe they gain from Malaysia's political stability.
The Malaysian government chose to create a state company, rather than using taxes, production limits, leasing, or other familiar instruments of supervision. The government wanted, and needed, the cooperation of the majors but also sought to assert national rights over the use of the country's resources. A state company, having both supervisory powers over the majors and production activities of its own, was a workable compromise between allowing the majors full rein and excluding them, along with their capital and expertise, altogether.
Petronas was established in August 1974 and operates under the terms of the Petroleum Development Act passed in October 1974. It was modeled on PERTAMINA, the Indonesian state oil and gas company founded in 1971 in succession to PERMINA, which had been set up in 1958. According to the 1971 plan, Petronas's goals would be to safeguard national sovereignty over oil and gas reserves, to plan for both present and future national need for oil and gas, to take part in distributing and marketing petroleum and petrochemical products at reasonable prices, to encourage provision of plant, equipment, and services by Malaysian companies, to produce nitrogenous fertilizers, and to spread the benefits of the petroleum industry throughout the nation.
Having created Petronas, the government had to choose what forms its dealings with private oil companies would take. Starting with its legal monopoly on oil and gas activities and resources, it had several options: it could simply award concessions without taking part in production, management, or profits; it could try offering services at the supply end; or it could make contracts to cover profit-sharing, production-sharing, joint ventures—sharing both profits and costs—or all stages of the process, under 'carried-interest' contracts. Petronas's first move was to negotiate the replacement of the leases granted to Royal Dutch/Shell on Borneo and to Esso in the Peninsula with production-sharing contracts, which have been the favored instrument, alongside joint ventures, ever since. These first contracts came into effect in 1976. Allowing for royalties to both federal and state governments, and for cost recovery arrangements, they laid down that the remainder would go 70% to Petronas and 30% to the foreign company. Esso began oil production in two offshore fields in 1978, exporting its share of the supply, unlike Petronas, whose share was consumed within the country.
Petronas went downstream for the first time in 1976, when it was chosen by the Association of South East Asian Nations (ASEAN) to begin construction on the second ASEAN joint industrial project, a urea plant. The subsidiary, Asean Bintulu Fertilizer (ABF), is based in Sarawak and now exports ammonia and urea all over the world.
Also in 1976, Malaysia became a net exporter of oil, but exports were at such a low level as to make the country ineligible to join OPEC. This situation benefited Malaysia, and Petronas, by allowing the company a degree of commercial and political flexibility and reinforcing Petronas's chief purpose, Malaysian self-reliance.
Petronas supervised its foreign partners' oil activities, taking no direct role in production until 1978, when the government saw to the creation of a subsidiary for oil exploration and production, Petronas Carigali. It began its work in an oil field off the Peninsula. Petronas retained its supervisory powers over all oil and gas ventures , particularly on issues of health and safety and environmental control.
The government was determined to develop Malaysia's natural gas as well as its oil. In 1974, it saw to the ordering of five tankers for liquefied natural gas (LNG) by the Malaysian International Shipping Company (MISC), of which it owned 61%. These were to take LNG exports out of Malaysia, save the cost of hiring foreign tankers, and expand the country's fleet under its own control—in contrast to cargo shipping, which was controlled by international conferences. Shell BV, the Royal Dutch/Shell subsidiary that was building the LNG plant off Sarawak with Japanese and Asian Development Bank aid, accepted production sharing with Petronas but baulked at sharing equity, transport management, or refining. Negotiations went on, pushing commencement further and further back, until 1977, when Petronas and the government, faced with the costs of maintaining the tankers between delivery and first use, surrendered management rights—leading to a repeal of part of the Petroleum Development Act—and settled for Petronas's taking 60% of equity in the new company Malaysia LNG. The Sarawak state government took 5%, and the other 35% was divided equally between Shell BV and the Mitsubishi Corporation. Production of LNG in Sarawak at last began in 1983.
After negotiations lasting from 1977 to 1982, Petronas had concluded contracts with Tokyo Electric Power and Tokyo Gas for the sale and delivery of LNG through to the year 2003. Malaysia LNG was to send almost the entire output of its Bintulu gas fields to Japan, under these contracts and another one, signed in 1990, to supply Saibu Gas of Fukuoka, in southwestern Japan, for 20 years from 1993.
When in 1982 Petronas Carigali formed an exploration and production company with Société National Elf Aquitaine of France, it allowed Elf better terms for recovering costs than it had offered in earlier ventures. This development came against the background of the government's imposition of a depletion policy on Petronas, Royal Dutch Shell, and Esso in an attempt to postpone the exhaustion of oil reserves. These were then estimated to be about 2.84 billion barrels (4.52E+8 m3), and it was officially predicted that by the late 1980s Malaysia would be a net oil importer once again. By 1980, oil and gas already represented 24% of Malaysian exports, and the government decided to impose a tax on these exports at a 25% rate. The new policy and the new tax combined to cause Malaysia's output and exports of crude oil to fall in 1981 for the first time since Petronas was established. Output rose again, beyond its 1980 level, in the following year, but exports took until 1984 to surpass their 1980 level.
However, the depletion policy was being undermined by external circumstances. Through the early 1980s, a worldwide oil glut, which OPEC proved unable to control, forced the Malaysian government to increase production to offset deterioration in its balance of increased payments to a deficit of $1 billion. It became clear that this could only be sustained by relaxing the conditions for joint ventures between Petronas and the major oil companies. In 1982, the Petronas–government share, which had risen to 80%, was cut to 70%, and taxes on company income were also cut.
Petronas went into refining and distribution in 1983. It initiated the construction of refineries at Malacca and at Kerteh in order to reduce its dependence on Royal Dutch/Shell's two refineries at Port Dickson and Esso's refinery in Sarawak. These two majors, and other foreign companies, already covered much of the domestic retail market, but the new subsidiary Petronas Dagangan was given the initial advantage of preference in the location of its stations. By 1990, 252 service stations carried the Petronas brand, all but 20 on a franchise basis, and another 50 were planned. Some were set up on grounds of social benefit rather than of strict commercial calculation.
As production from Royal Dutch/Shell and Esso's existing fields moved nearer depletion, the companies sought new fields and new contracts. In 1985, the government and Petronas revised the standard production-sharing contract, increasing the rate of recovery of capital costs from 30% to 50% of gross production in the case of oil and from 35% to 60% in the case of natural gas, abolishing signature, discovery, and production bonus payments and increasing the foreign partners' share of the profits. At first the drastic fall in oil prices during 1986, which cut Malaysia's income from exported oil by more than a third even though the volume of exports rose by 16%, discouraged interest in the new arrangements, but by 1989 Petronas had signed 22 new contracts with 31 companies from 11 countries. However, the contract period was still restricted to five years—compared, for example, with the 35-year contracts available in neighboring Singapore—and there was still a 25% levy on exported crude oil, a measure that was intended to promote the domestic refining industry. These conditions, cited as disincentives to foreign investment, were eventually relaxed over the next several years.
The government and Petronas aimed to encourage the replacement of fast-depleting oil within Malaysia itself and simultaneously to foster heavy industries which could help reduce the country's overwhelming dependence on exporting its natural resources. In 1980, petroleum products accounted for 88% of the country's commercial consumption of energy, the rest being provided from hydroelectric plants in Sarawak, too far away from the main population centers to become a major alternative. Five years later, gas accounted for 17%, hydroelectricity for 19%, coal for 2%, and petroleum products for 62% of such consumption, and about half of each year's gas output was being consumed in Malaysia.
The Petronas venture responsible for this shift in fuel use, and—along with Malaysia LNG—for Malaysia's becoming the third largest producer of LNG in the world, was the Peninsular Gas Utilization Project (Projek Pennggunaan Gas Semenanjung), the aim of which was to supply gas to every part of the Peninsula. Its first stage was completed in 1985, following the success of smaller gasification projects in the states of Sarawak and Sabah, and involved the extraction of gas from three fields in the Natuna Sea, between the Peninsula and the island of Borneo; its processing in a plant at Kertih on the Peninsula's east coast; and its distribution to the state of Terengganu by pipeline and abroad via an export terminal.
Petronas's least happy venture was its ownership of the Bank Bumiputra, the second-largest, but least-profitable, of the commercial banks incorporated in Malaysia. Petronas spent more than M$3.5 billion over five years trying to rescue the bank from the impact of the bad loans it had made, starting with its support of the Carrian property group of Hong Kong, which collapsed in 1985, taking the bank's share capital down with it. In 1991, Petronas sold the bank back to another state company, Minister of Finance Inc., and announced its intention to concentrate on oil, gas, and associated activities in future.
Just as Petronas was disposing of this liability, the crisis caused by the Iraqi regime's invasion of Kuwait culminated in military action against Iraq on behalf of the United Nations. Petronas had already raised Malaysia's oil production rate from 605,000 to 650,000 barrels per day (103,000 m³/d) in late 1990 as the crisis unfolded. This move only reinforced the company's awareness of the need to vary its policies, since, with known reserves of 2.94 billion barrels (467,000,000 m3), and assuming no new major finds of oil, Malaysia risked seeing output decline to 350,000 barrels per day (56,000 m³/d) in 2000 and running down to depletion within another five years. This was exacerbated by the possibility that Southeast Asia in general would enjoy rapid economic growth in the 1990s, so that demand for oil there would rise twice as fast as demand in the relatively more sluggish, more mature economies of North America and Europe. The Malaysian government, and its state oil and gas company, was forced to decide what mixture of policies to adopt in response.
Battling Oil Depletion: Late 1980s
Another way to postpone depletion was to develop sources of oil, and of its substitute, natural gas, outside Malaysia. Late in 1989, the governments of Vietnam and Myanmar (Burma) invited Petronas Carigali to take part in joint ventures to explore for oil in their coastal waters. In 1990, a new unit, Petronas Carigali Overseas Sdn Bhd, was created to take up a 15% interest in a field in Myanmarese waters being explored by Idemitsu Myanmar Oil Exploration Co. Ltd., a subsidiary of the Japanese firm Idemitsu Oil Development Co. Ltd., in a production sharing arrangement with Myanma Oil and Gas Enterprise. Thus began Petronas's first oil exploration outside Malaysia. In May 1990, the governments of Malaysia and Thailand settled a long-running dispute over their respective rights to an area of 7,300 square kilometers in the Gulf of Thailand by setting up a joint administrative authority for the area and encouraging a joint oil exploration project by Petronas, the Petroleum Authority of Thailand, and the U.S. company Triton Oil. In a separate deal, in October 1990, the Petroleum Authority of Thailand arranged with Petronas to study the feasibility of transferring natural gas from this jointly administered area, through Malaysia to Thailand, by way of an extension of the pipelines laid for the third stage of the Peninsular Gas Utilization Project.
That project was on course to becoming a major element in the postponement of oil depletion. Contracts for line pipes for the second stage of the project were signed in 1989 with two consortia of Malaysian, Japanese, and Brazilian companies. This stage, completed in 1991, included the laying of 730 kilometers of pipeline through to the tip of the Peninsula, from where gas could be sold to Singapore and Thailand; the conversion of two power stations—Port Dickson and Pasir Gudang—from oil to gas; and the expansion of Petronas's output of methyl tertiary butyl ether (MTBE), propylene, and polypropylene, which were already being produced in joint ventures with Idemitsu Petrochemical Co. of Japan and Neste Oy of Finland. The third and final stage of the project was to lay pipelines along the northwest and northeast coastlines of the Peninsula and was completed in 1997.
Another new venture in 1990 was in ship-owning, since Petronas's existing arrangements with MISC and with Nigeria's state oil company would be inadequate to transport the additional exports of LNG due to start in 1994, under the contract with Saibu Gas. Petronas did not lose sight of the government's commitment to Malaysian self-reliance, and the company's second refinery at Malacca, completed in 1994, with a capacity of 100,000 barrels per day (16,000 m³/d), promoted the same policy. The fact that it was built in a joint venture with Samsung of Korea, the Chinese Petroleum Corporation of Taiwan, and Caltex of the United States did not negate the policy, for the subsidiary company Petronas Penapisan (Melaka) had a decisive 45% of equity while sharing the enormous costs of and gaining advanced technology for the project. More to the point, a side effect of the refinery's completion was that Petronas was able to refine all of the crude oil it produced, instead of being partially dependent on refining facilities in Singapore.
Petronas, with its policies of promoting self-reliance, helping to develop associated industries, and varying the sources and uses of oil and gas, played an important role in the Malaysian economy as a whole. Under governments which—by current, if not historical, Western standards—were strongly interventionist, the contribution of oil taxes to the federal government's revenue hovered at around 12% to 16% until 1980, when it showed a marked increase to 23%, followed by another leap to 32% in 1981. From then until 1988 the proportion fluctuated between 29% and 36%. Petronas was not just another big oil company: it controlled a crucial sector of the economy and remained, for better or worse, an indispensable instrument of the state.
Expanding Globally: 1990s and Beyond
In 1996, Petronas entered the aromatics market by way of a joint venture that created Aromatics Malaysia Sdn Bhd. It also formed a contract with China National Offshore Oil Corporation and Chevron Overseas Petroleum Ltd. to begin exploration of block 02/31 of the Liaodong Bay area in China. While the Asian economy as a whole suffered from an economic crisis during 1997 and 1998, Malaysia was quick to bounce back due to successful government reforms. From its new headquarters in the world's tallest buildings, the Petronas Twin Towers, the state-owned concern continued its development in the oil and gas industry.
During 1997, Petronas heightened its diversification efforts. The firm set plans in motion to build three petrochemical plants in Kuantan as well as an acetic facility in Kerteh. Its first LPG joint venture in China was launched that year and the company acquired a 29.3% interest in Malaysia International Shipping Corporation Berhad (MISC). In 1998, Petronas's tanker-related subsidiary merged with MISC, increasing Petronas's stake in MISC to 62%. That year, Petronas introduced the Petronas E01, the country's first commercial prototype engine. The company also signed a total of five new production sharing contracts (PSCs) in 1998 and 1999, and began oil production in the Sirri field in Iran.
Petronas entered the new century determined to expand its international efforts. The company forged deals for two new exploration plots in Pakistan and began construction on the Chad-Cameroon Integrated Oil Development and Pipeline Project. By 2002, Petronas had signed seven new PSCs and secured stakes in eight exploration blocks in eight countries, including Gabon, Cameroon, Niger, Egypt, Yemen, Indonesia, and Vietnam. The firm also made considerable progress in its petrochemicals strategy, opening new gas-based petrochemical facilities in Kerteh and Gebeng.
By 2003, Malaysia was set to usurp Algeria as the world's second-largest producer of LNG with the completion of the Malaysia LNG Tiga Plant. Prime Minister Mahathir Mohamad commented on the achievement in a May 2003 Bernama News Agency article, claiming that 'the Petronas LNG complex now serves as another shining example of a vision realized of a national aspiration, transformed into reality by the same belief among Malaysians that 'we can do it.'' Indeed, Petronas had transformed itself into a global oil company over the previous decade, becoming a national symbol for success. The company realized, however, that it would have to continue its aggressive growth strategy in order to insure its survival in the years to come.
Petronas overseas expansion drive continuous with the acquisition of Woodsite Energy Ltd Mauritania assets for $418 million in 2007. The venture proved successful as they discovered oil in May 2008
In 2004, Minister in the Prime Minister's Department, Datuk Luqmanadk Mohamed, stated that Petronas contributed RM 25 Billion to the country's treasury accounting for 25% of revenue collected via dividends and other revenues. Petronas continuously provides the Malaysia government dividends from its profits. Since inception in 1974, Petronas have paid the government RM 403.3 billion, with RM 67.6 billion in 2008. The payment represents 44% of the 2008 federal government revenue. Petronas continues to focus on international exploration projects as 40% of revenue in 2008 was derived from international projects such as Iran, Sudan, Chad and Mauritania. The company’s international reserves stood at 6.24 billion barrels oil equivalent in 2008.
Petronas Dagangan Berhad
The company also team up with local food and beverage players, banks and transportation players to provide better services at their petrol stations. Players include McDonalds, Kentucky Fried Chicken, Dunkin Donuts, Konsortium Transnasional Berhad, Maybank and also CIMB Bank.
Petronas Gas Berhad
It also sponsors many other sporting events and teams, mostly motorsports. Some of these sponsorships includes the PERT (Petronas EON Rally Team), the now defunct Foggy Petronas Superbike team (in which Petronas debutes their own superbike, the FP1), and also the Petronas Adventure Team, a 4X4 adventure team. More recently Petronas is also a major sponsor for PETRONAS TOYOTA TEAM TOM'S car no. #36 which is currently participating in 2008 Super GT series. The series also race in Malaysia every season at Sepang International Circuit.
In terms of further Formula One involvement, every year Petronas takes the BMW-Sauber teams to various parts of Malaysia for F1 demos so the public who are unable to go to the track itself get to experience a little bit of what F1 offers. Other promotional events are held in the run up to the race and the drivers play an integral part in this so much so that Nick Heidfeld concedes that there are more fans for BMW-Sauber in Malaysia in than most other countries.
As part of its corporate social responsibility programme, Petronas also brings underprivileged kids to watch the race.
Kuala Lumpur often abbreviated as K.L., is the largest city of Malaysia. The city proper, making up an area of 244 km2 (94 sq mi), has an estimated population of 1.6 million in 2006. Greater Kuala Lumpur, also known as the Klang Valley, is an urban agglomeration of 7.2 million. It is the fastest growing metropolitan region in the country, in terms of population as well as economy.
Kuala Lumpur is the seat of the Parliament of Malaysia.Kuala Lumpur is also the 11th largest city in the world. The city was once home to the executive and judicial branches of the federal government, but they have since moved to Putrajaya starting in 1999. Some sections of the judiciary remain in the capital. The official residence of the Malaysian King, the Istana Negara, is also situated in Kuala Lumpur. The city is also the cultural and economic centre of Malaysia due to its position as the capital as well as being a primate city. Kuala Lumpur is rated as a gamma world city, and is the only global city in Malaysia.
Kuala Lumpur is defined within the borders of the Federal Territory of Kuala Lumpur and is one of three Malaysian Federal Territories. It is an enclave within the state of Selangor, on the central west coast of Peninsular Malaysia. Residents of the city are known as KLites.
Beginning in the 1990s, the city has played host to many international sporting, political and cultural events including the 1998 Commonwealth Games and the Formula One World Championship. In addition, Kuala Lumpur is home to the tallest twin buildings in the world, the Petronas Twin Towers.
These mines became a trading post and was considered a frontier town with many problems including the Selangor Civil War; it was also plagued by diseases and constant fires and floods. Around the 1870s, the Chinese Kapitan of Kuala Lumpur, Yap Ah Loy, emerged as leader, and became responsible for the survival and subsequent systematic growth of this town.He is the one who began to develop Kuala Lumpur from a small unknown place into a mining town with economic boom. In 1880, the state capital of Selangor was moved from Klang to the more strategically advantageous Kuala Lumpur.
In 1881, a flood swept through the town following a fire which engulfed it earlier. These successive problems destroyed the town's structures of wood and atap (thatching). As a response, Frank Swettenham, the British Resident of Selangor, required that buildings be constructed of brick and tile. Many of the new brick buildings mirrored that of shop houses in southern China, with 'five foot ways' as well as skilled Chinese carpentry. This resulted in a distinct eclectic shop house architecture typical to this region. A railway line increased accessibility into this town. Development intensified in the 1890s, leading to the creation of a Sanitary Board. In 1896, Kuala Lumpur was chosen as the capital of the newly formed Federated Malay States.
A mixture of different communities settled in various sections of Kuala Lumpur. The Chinese mainly settled around the commercial centre of Market Square, east of Klang River, and towards Chinatown. The Malays, Indian Chettiars, and Indian Muslims resided along Java Street (now Jalan Tun Perak). The Padang, now known as Merdeka Square, was the center of the British administrative offices.
During World War II, Kuala Lumpur was captured by the Japanese army on January 11, 1942. They remained in occupation until August 15, 1945, when the commander in chief of the Japanese Seventh Area Army in Singapore and Malaya, Seishirō Itagaki, surrendered to the British administration following the Atomic bombings of Hiroshima and Nagasaki. Kuala Lumpur grew through the war, the rubber and tin commodity crashes and the Malayan Emergency, during which Malaya was preoccupied with the communist insurgency. In 1957, the Federation of Malaya gained its independence from British rule. Kuala Lumpur remained the capital through the formation of Malaysia on September 16, 1963.
On May 13, 1969, one of the worst race riots in Malaysia took place in Kuala Lumpur. The May 13 Incident was a riot between the Malays and the Chinese who were dissatisfied with the socio-political situation at the time. The riot resulted in the deaths of 196 people, and led to a major reform in the country's economic policy.
Kuala Lumpur later achieved city status in 1972, becoming the first settlement in Malaysia to be granted the status after independence. Later, on February 1, 1974, Kuala Lumpur became a Federal Territory. Kuala Lumpur ceased to be the capital of Selangor in 1978 after the city of Shah Alam was declared as the new state capital.
In 1998, another political movement known as Reformasi took place mainly in this city. The movement was a result of the sacking of former Malaysian Deputy Prime Minister, Anwar Ibrahim, and resulted in a chain of protests until 1999, where supporters of Anwar Ibrahim took to the streets to demand reforms in the government's administration, among others.
On February 1, 2001, Putrajaya was declared a Federal Territory, as well as the seat of the federal government. The administrative and judicial functions of the government were shifted from Kuala Lumpur to Putrajaya. Kuala Lumpur however still retained its legislative function, and remained the home of the Yang di-Pertuan Agong (King).
Located in the center of Selangor state, Kuala Lumpur was previously under the rule of Selangor State Government. In 1974, Kuala Lumpur was separated from Selangor to form the first Federal Territory governed directly by the Malaysian Federal Government. Its location on the west coast of Peninsular Malaysia, which has wider flat land than the east coast, has contributed to its faster development relative to other cities in Malaysia.
The municipality of the city covers an area of 243.65 km2 (94.07 sq mi), with an average elevation of 21.95 m (72 ft).
Climate and weather
Flooding is a frequent occurrence in Kuala Lumpur whenever there is a heavy downpour, especially in the city centre and downstream areas. Dust particles from forest fires from nearby Sumatra sometimes cast a haze over the region. It is a major source of pollution in the city together with open burning, emission from motor vehicles and construction work.
Kuala Lumpur also has a mix of different cultures which include Malays, Chinese, Indians, Eurasians, as well as Kadazans, Ibans and other indigenous races from East Malaysia and Peninsula Malaysia.
Kuala Lumpur's rapid development, triggered huge influx of foreign workers from Indonesia, Nepal, Burma, Thailand, Bangladesh, Pakistan, India, Sri Lanka, Vietnam and China into Malaysia.
In the late-18th century, when Europe underwent Industrial Revolution, large groups of Chinese from Fujian and Guangdong in China were brought in to Malaya to work in the booming tin mining industry. The Chinese in Kuala Lumpur speak different dialects but the majority in Kuala Lumpur are of Cantonese descent, followed by the Hokkiens and the Hakkas.
Indians form 10% of the population in Kuala Lumpur (as in 2000), mostly practise Hinduism and speak Tamil and other Indian and Pakistani languages such as Hindi, Malayalam, Punjabi, Telugu and Pashtu. Historically, most of the Indians were brought in during the British colonisation of the Malaysia. Their popular festivals are Thaipusam, Deepavali and Pongal.
Islam is practised primarily by the Malays and the Indian Muslim communities. Other major religions are Hinduism (among Indians), Buddhism, Confucianism and Taoism (mainly among Chinese) and Christianity. The city has many places of worship catering to the multi-religious population.
Based on the census of the Department of Statistics (see http://www.statistics.gov.my/eng/), the percentage of Bumiputera population in Kuala Lumpur alone was around 38% in 2000 (next census is in 2010) while the Chinese population comprised 43% and Indians 10%. A notable phenomenon has been the increase in the presence of foreign residents in Kuala Lumpur, who now constitute about 9% of the city’s population.
Crime in Kuala Lumpur has been a concern of residents in recent years. Among the crimes showing increasing rates were snatch theft, drug addiction, gambling and vice. These problems have been associated with the rising numbers of immigrants from Indonesia and Myanmar. Some of them are brought in with the promise of low to medium grade salary.
Since Kuala Lumpur became a Federal Territory of Malaysia on February 1, 1974, the city has been led by nine mayors. The current mayor of Kuala Lumpur is Dato' Ahmad Fuad Ismail, who is in his first term of office. He was appointed in 2008.
The city remains as the economic and business center of the country. In fact, the city is a center for finance, insurance, real estate, media and the arts of Malaysia. The infrastructure development in the surrounding areas such as the Kuala Lumpur International Airport at Sepang, the creation of the Multimedia Super Corridor and the expansion of Port Klang further reinforce the economic significance of the city.
Bursa Malaysia or the Malaysia Exchange is based in the city and forms one of its core economic activities. As of 20 November, 2007, the market capitalisation stood at US$318.65 billion.
The Gross Domestic Product (GDP) for Kuala Lumpur is estimated at RM25,968 million in 2000 with an average annual growth rate of 4.2 percent. The per capita GDP for Kuala Lumpur in year 2000 is RM30,727, an average annual growth rate of 6.1 percent. The total employment in Kuala Lumpur is estimated at around 838,400. The service sector comprising finance, insurance, real estate, business services, wholesale and retail trade, restaurants and hotels, transport, storage and communication, utilities, personal services and government services form the largest component of employment representing about 83.0 percent of the total. The remaining 17 percent comes from manufacturing and construction.
The large service sector is evident in the number of local and foreign banks and insurance companies operating in the city. Kuala Lumpur is poised to become the global Islamic Financing hub with an increasing number of financial institutions providing Islamic Financing and the strong presence of Gulf's financial institutions such as the world's largest Islamic bank, Al-Rajhi Bank and Kuwait Finance House. Apart from that, the Dow Jones & Company is keen to work with Bursa Malaysia to set up Islamic Exchange Trade Funds (ETFs), which would help raise Malaysia's profile in the Gulf. The city has a large number of foreign corporations and is also host to many multi national companies’ regional offices or support centres, particularly for finance and accounting, and information technology functions. Most of the countries’ largest companies have their headquarters based here and as of December 2007 and excluding Petronas, there are 14 companies that are listed in Forbes 2000 based in Kuala Lumpur.
Other important economic activities in the city are education and health services. Kuala Lumpur also has advantages stemming from the high concentration of educational institutions located within its boundaries, providing a wide range of courses. Such public institutions include the International Islamic University Malaysia,University of Malaya, the Universiti Teknologi Malaysia, International Medical University and the Medical Faculty of the Universiti Kebangsaan Malaysia. There are also a large number of private colleges, including the Universiti Tun Abdul Razak and Tunku Abdul Rahman College, in and around Kuala Lumpur providing a wide range of courses which attract students from all over Malaysia as well as from other countries. There are numerous public and private medical specialist centres and hospitals in the city which offer general health services and a wide range of specialist surgery and treatment catering to locals and tourists.
There has been growing emphasis to expand the economic scope of the city into other service activities such as research and development which supports the rest of the economy of Malaysia. Kuala Lumpur has been home for years to important research centers such as the Rubber Research Institute of Malaysia, the Forest Research Institute Malaysia and the Institute of Medical Research and more research centers are expected to be established in the coming years.
Major destinations include the Kuala Lumpur City Centre, KLCC,House of Parliament, Kuala Lumpur Tower, Putra World Trade Centre, Dataran Merdeka, Tugu Negara, Istana Negara, Istana Budaya, mosques such as the Masjid Jamek, Masjid Negara and the Federal Territory Mosque, Muzium Negara, and other tourist attractions including Aquaria KLCC, Batu Caves, Makam Pahlawan, National Science Centre, Zoo Negara, and events such as Malay cultural centres, the Chinese cultural festivals at the Thean Hou Temple and the Thaipusam procession at the Sri Mahamariamman Temple. The Golden Triangle, the commercial hub of the city, contains the Petronas Twin Towers and has a distinctive nightlife. Trendy nightclubs, bars and lounges, such as Hakka Republic Wine bar & Restaurant,Hard Rock Cafe, Zouk, Thai Club, Beach Club (voted Best Bar in Asia), Luna Bar, Rum Jungle, Nuovo, Espanda and many others are located within and around Jalan P. Ramlee, Jalan Sultan Ismail and Jalan Ampang. If it's Italian you're after Nerovivo (Jalan Ceylon), Neroteca (Lorong Ceylon) or Nerofico (Jalan Dungun) are the best in town.
Hotels, from five-star to budget types, have cropped up everywhere to accommodate the influx of tourists each year. While there are many hotels near Kuala Lumpur's entertainment and business districts, some have chosen to veer away from the hustle and bustle.
Apart from shopping complexes, Kuala Lumpur has designated numerous zones in the city to market locally manufactured products such as textiles, fabrics and handicrafts. The Chinatown of Kuala Lumpur, or commonly known as Petaling Street, is one of them. Chinatown features many pre-independence buildings with Straits Chinese and European traditions influence. The Kuala Lumpur's Central Market, which was once the city's wet market, offers an assortment of arts and craft merchandise, varying from antiques and paintings to souvenirs and clothing. It is also known as Pasar Seni in Malay.
Since 2000, the Ministry of Tourism of Malaysia has kick-started the mega sale event for all shopping in Malaysia. The mega sale event is held thrice in a year—in March, May and December—where all shopping malls are encouraged to participate to boost Kuala Lumpur as a leading shopping destination.
Prior to the Second World War, many shophouses, usually two storeys with functional shops on the ground floor and separate residential spaces upstairs, were built around the old city centre. These shop-houses drew inspiration from Straits Chinese and European traditions. Some of these shophouses have made way for new developments but there are still many standing today around Medan Pasar (Old Market Square), Chinatown, Jalan Tuanku Abdul Rahman, Jalan Doraisamy, Bukit Bintang and Tengkat Tong Shin areas.
Independence coupled with the rapid economic growth from the 1970s to the 1990s and with Islam being the official religion in the country, has resulted in the construction of buildings with a more local and Islamic flavour arise around the city. Many of these buildings derive their design from traditional Malay items such as the songkok and the keris. Some of these buildings have Islamic geometric motifs integrated with the designs of the building, signifying Islamic restriction on imitating nature through drawings. Examples of these buildings are Menara Telekom, Menara Maybank, Dayabumi Complex, and the Islamic Center. Some buildings such as the Islamic Arts Museum Malaysia and National Planetarium have been built to masquerade as a place of worship, complete with dome and minaret, when in fact it is a place of science and knowledge. The 452-metre (1,480 ft) tall Petronas Twin Towers were designed to resemble motifs found in Islamic art.
Late modern and postmodern architecture began to appear in the late-1990s and early-2000s. With the economic development, old buildings such as Bok House have been razed to make way for new ones. Buildings with all glass shell appears around the city, with the most prominent example being the Petronas Twin Towers and Kuala Lumpur Convention Centre.
Kuala Lumpur’s central business district today has shifted around the Kuala Lumpur city centre (KLCC) where many new and tall buildings with modern and postmodern architecture fill the skyline.
There are three forest reserves within the city namely the Bukit Nanas Forest Reserve in the city centre, the oldest gazetted forest reserve in the country (10.52 ha/26.0 acres, Bukit Sungai Putih Forest Reserve (7.41 ha/18.3 acres) and Bukit Sungai Besi Forest Reserve (42.11 ha/104.1 acres). Bukit Nanas, in the heart of the city centre, is one of the oldest virgin forests in the world within a city. These residual forest areas are home to a number of fauna species particularly monkeys, tree shrews, squirrels and birds.
Kuala Lumpur also has an Islamic Arts Museum which houses more than seven thousand Islamic artefacts including rare exhibits from China as well as a library of Islamic art books. This museum features some impressively decorated domes and large open exhibition spaces. It is located at Jalan Lembah Perdana next to the National Mosque.
The premier performing arts venue is the Petronas Philharmonic Hall. The resident orchestra is the Malaysian Philharmonic Orchestra (MPO), consisting of musicians from all over the world and features regular concerts, chamber concerts and traditional cultural performances.
The National Art Gallery of Malaysia is located on Jalan Temerloh, off Jalan Tun Razak on a 5.67-hectare (14.0-acre) site neighbouring the National Theater (Istana Budaya) and National Library. The architecture of the gallery incorporates elements of traditional Malay architecture, as well as contemporary modern architecture. The National Art Gallery serves as a centre of excellence and trustee of the national art heritage.
The Petronas Art Gallery, another centre for fine art, is situated in Kuala Lumpur City Centre (KLCC). The Galeri Tangsi near Dataran Merdeka houses exhibitions of works by local and foreign artists.
The Kuala Lumpur Performing Arts Centre (KLPac) in Sentul West is one of the most established centres for the performing arts, notably theatre, music, and film screening, in the country. It has housed many local productions and has been a supporter of local and regional independent performance artists. One of the highlights in 2006 was the KL Sing Song 2006 music fest which featured Malaysian singer-songwriters of various cultural backgrounds, from both West and East Malaysia, through two days of performances and workshops.
Kuala Lumpur holds the Malaysia International Gourmet Festival annually Another event hosted annually by the city is the Kuala Lumpur Fashion Week, which includes international brands as well as local designers.
Kuala Lumpur has numerous parks and open spaces for recreational purposes. Total open space for recreational and sport facilities land use in the city has increased significantly by 169.6 percent from 586 hectares (1,450 acres) in 1984 to 1,580 hectares (3,900 acres) in 2000.
Kuala Lumpur is one of the host cities for the Formula One World Championship, the open-wheel auto racing A1 Grand Prix and the Motorcycle Grand Prix with races being held at Sepang International Circuit in the neighbouring state of Selangor, next to the Kuala Lumpur International Airport. The Formula One event contributes significantly to tourist arrivals and tourism income to Kuala Lumpur. This is evident during the Asian Financial Crisis in 1998. Despite cities around Asia suffering declining tourist arrivals, Kuala Lumpur tourist arrivals increased from 6,210,900 in 1997 to 10,221,600 in 2000, or 64.6% increase in tourist arrivals.
Other annual sport events hosted by the city include the KL Tower Run, the KL Tower International BASE Jump Merdeka Circuit and the Kuala Lumpur International Marathon. Kuala Lumpur is also one of the stages of the Tour de Langkawi cycling race.
Kuala Lumpur has a considerable array of sports facilities of international class after hosting the 1998 Commonwealth Games. Many of these facilities including the main stadium (with running track and a football field), hockey stadium and swimming pools are located in the National Sports Complex at Bukit Jalil while a velodrome and more swimming pools are located in Bandar Tun Razak, next to the Taman Tasik Permaisuri Lake Gardens. There are also soccer fields, local sports complexes, swimming pools and tennis courts scattered around the suburbs. Badminton and ‘takraw’ courts are usually included in community halls.
Kuala Lumpur has several golf courses including the Kuala Lumpur Golf and Country Club (KLGCC) and the Malaysia Civil Service Golf Club in Kiara and the Berjaya Golf Course at Bukit Jalil.
The city also has numerous large private fitness centers run by California Fitness, Fitness First, Celebrity Gym, True Fitness and the major five star hotels.
The city is also home to the country's main pay-TV service, Astro, a satellite television service, which broadcasts local and global television channels such as CNN, BBC World, Star World and HBO. Al-Jazeera, the Doha-based Arab news network has launched a new English-speaking channel called Al-Jazeera English to boost its international viewership with one of its broadcast centers based in Kuala Lumpur. Phoenix TV, a Hong Kong based television broadcaster has also announced plans to expand its regional business by partnership with local satellite TV provider, Astro. The Hong Kong office of Channel V International, an international music channel, relocated its programme production unit in Kuala Lumpur by appointing the local company Double Vision Sdn Bhd. In March 2008, Time Out, the international listings and events magazine, launched in Kuala Lumpur as its 24th global city.
Kuala Lumpur has been featured in all aspects of popular culture such as movies, television, music and books. Movies set in Kuala Lumpur include Entrapment, starring Sean Connery and Catherine Zeta-Jones, and Children of Men, (starring Clive Owen) where the Petronas Twin Towers were depicted in flames for a few seconds. Books which were set in Kuala Lumpur include KL 24/7 by Ida M Rahim, Shireen Zainudin and Rizal Zainudin and Democracy by Joan Didion. Kuala Lumpur is also mentioned in many songs by local Malaysian artists such as Keroncong Kuala Lumpur by P. Ramlee, Kuala Lumpur, Ibu Kota by Saloma, Chow Kit Road by Sudirman Arshad, Senyumlah Kuala Lumpur by Alleycats, Streets of Kuala Lumpur by Murkyway, K.L. by Vandal, Kuala Lumpur by Poetic Ammo, Anak Dara by Azmyl Yunor and KL by Too Phat. Kuala Lumpur was also one of the destinations in The Amazing Race Asia and The Amazing Race. Games have also been set in Kuala Lumpur. They include three levels of the game Hitman 2: Silent
In terms of air connectivity, Kuala Lumpur is served by two airports. The main airport, Kuala Lumpur International Airport (KLIA), which is also the aviation hub of Malaysia, is located about 50 kilometres (31 mi) south of city. The other airport is Subang Airport which used to be the main international airport serving the city until KLIA replaced it when it opened in 1998. The airport connects the city with direct flights to destinations in six continents around the world, and is the main hub for the national carrier, Malaysia Airlines. KLIA can be reached using the KLIA Ekspres high-speed train service from KL Sentral which takes only twenty-eight minutes, while travelling by car via highway will take about an hour. As of 2007, Subang Airport is only used for chartered and turboprops flights by airlines such as Firefly and Berjaya Air.
Public transport on Kuala Lumpur and the rest of the Klang Valley covers a variety of transport modes such as bus, rail and taxi. Despite efforts to promote usage of public transportation, utilisation rates are low as only 16 percent of the population used public transportation in 2006. The rapid transit system in Kuala Lumpur consists of three separate rail systems which meet in the city and extends towards other parts of Klang Valley. The rail systems are RapidKL RAIL, KL Monorail, and KTM Komuter. These lines have either underground or elevated stations around the city. The main rapid transit hub is KL Sentral which facilitates as an interchange station for the rail systems. KL Sentral is also a hub for intercity railway operated by KTM Intercity. It provides rail services to as far as Singapore in the south, and Hat Yai, Thailand, in the north.
The largest public transportation operator in Kuala Lumpur and the Klang Valley is RapidKL. Since the take over from Intrakota Komposit Sdn Bhd, RapidKL has redrawn the entire bus network of Kuala Lumpur and Klang Valley metropolitan area to increase ridership and improve Kuala Lumpur's public transportation system. The management of RapidKL has adopted the hub and spoke system to provide greater connectivity, and cut down the need of more buses. RapidKL is also the operator of three rapid transit rail lines in Kuala Lumpur, namely Ampang Line, Sri Petaling Line and Kelana Jaya Line.
Kuala Lumpur is served by Port Klang, located about 64 km (40 mi) southwest of the city. The port is the largest and busiest in the country handling about 6.3 million twenty-foot equivalent units (TEU) of cargo in 2006.
In Kuala Lumpur alone, there are 13 tertiary education institutions, 79 high schools, 155 elementary schools and 136 kindergartens.
There are several notable institutions located in the city which have existed for more than 100 years, such as, Victoria Institution (1893); Methodist Girls' School, Kuala Lumpur (1896); Methodist Boys' School (1897); Convent Bukit Nanas (1899) and St. John's Institution (1904);
Kuala Lumpur is home to the University of Malaya. Established in 1962, it is the oldest university in Malaysia, and one of the oldest in the region. It is also the most prestigious tertiary institution in Malaysia, having been ranked first among the universities in Malaysia in the 2004 THES international rankings. In recent years, the number of international students at University of Malaya has risen, a result of increasing efforts made to attract more international students.
Other universities located in Kuala Lumpur include International Medical University, Open University Malaysia, Universiti Kuala Lumpur, Wawasan Open University and the branch campus of Universiti Kebangsaan Malaysia and Universiti Teknologi Malaysia. Apart from these, universities located around Kuala Lumpur include Monash University Malaysia Campus, Taylor's University College, HELP University College and others.
The National Defence University of Malaysia is located at Sungai Besi Army Base, at the southern part of central Kuala Lumpur. It was established to be a major centre for military and defence technology studies. This institution covers studies in the field of army, navy, and air force.
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