Abang Jo says will “fight to the last” for 5 per cent petroleum sales tax

Abang Johari (seated centre) answering questions during the forum. Also seen are (from left) Ting, Abang Abdul Karim, Fong and Fatimah.

By Karen Bong

KUCHING, Oct 9: Chief Minister Datuk Patinggi Abang Johari Tun Openg pledged to fight to the last to get Petronas to cough up the five per cent sales tax on export of petroleum products imposed by the Sarawak government which was due by Sept 30.

“Things are still being negotiated. But I will fight to the last so please bear with me,” he said during the Sarawak Business Federation (SBF)’s Business Engagement Session with the Chief Minister event held at Borneo Convention Centre Kuching (BCCK) here today.

He was responding to a question on steps the state government would take since Petronas has yet to pay for the sales tax.

Abang Johari reiterated that under Sarawak legislation (Oil Mining Ordinance 1958), Petronas has to pay the sales tax as it is Sarawak’s right.


“When Petronas operates in Canada, they have to comply with the country’s regulations. Similarly, when they operate in Sarawak, they have to comply with Sarawak law. Simple as that,” he said.

“If they breach the law, then the law will have to take its course. It is simple,” he added.

Abang Johari pointed out that the state government can even impose 10 per cent sales tax as there is no ceiling but considering the current situation, they only imposed five per cent.

“The total export revenue through LNG is about RM40 billion a year. So what is RM3 billion to RM40 billion (to Petronas)?” he asked.

Indicating willingness to consider reducing the tax if Petronas requested so due to economic circumstances, he however said Sarawak must get an equivalent value in return through some commercial arrangements.

“What we do is increase our equity in LNG plants in Bintulu which currently is at 25 per cent. In other words, we want to participate in the downstream and upstream activities on oil and gas in Sarawak waters,” he emphasised.

Abang Johari added that he has submitted proposals on a formula for the sharing arrangement between the state government and Petronas to Prime Minister Tun Dr Mahathir Mohamad and the federal government

“But of course there are certain areas considered grey which are still being negotiated and discussed. We are very firm on this (oil and gas matter),” he added.

Deputy Chief Minister Tan Sri Dr James Jemut Masing, Minister of Local Government and Housing Datuk Dr Sim Kui Hian, State Legal Counsel Dato Sri Fong Joo Chung, Professor at the Faculty of Economics and Administration, University of Malaya Dr Fatimah Kari, SBF president Datuk Abang Abdul Karim Tun Openg as well as its deputy president Datuk Dr Philip Ting were also present. — DayakDaily