Abg Jo to Putrajaya: Re-calibrate oil, gas tax structure

KUCHING, Jan 3: Chief Minister Datuk Patinggi Abang Johari Tun Openg, insisting that Sarawak will not sacrifice its rights, has suggested that the federal government re-calibrate the tax structure for oil and gas sector in accordance with state’s five per cent sales tax on petroleum products to make the sector more competitive.

“This is because federal government also imposed a 38 per cent petroleum income tax (PITA). So what they can do is reduce the tax by deducting the five per cent (and collect) 33 per cent to make it (the sector) more competitive.

“Why should we sacrifice ourselves because it (imposing the tax) is the right of Sarawak, where the (special cabinet steering) committee (on Malaysia Agreement 1963) also agreed,” he emphasised.

This view was presented to the Ministry of Finance (MoF) during the maiden Malaysia Agreement 1963 (MA63) special cabinet steering committee meeting chaired by Prime Minister Tun Dr Mahathir Mohamad in Putrajaya on Dec 17.

The MoF had raised that imposing the sales tax on petroleum was unfitting.

Abang Johari (centre) holding the details of the Sarawak Consultative Committee meeting in a photo with (from left) Abdul Karim, Uggah, Wong and Sharifah Hasidah.

“The reason was that it (sales tax on petroleum) may increase the cost and investors may not want to invest in oil and gas in Malaysia,” Abang Johari told a press conference at the new State Legislative Assembly Complex today.

Earlier, the Sarawak Consultative Committee on Malaysia Agreement 1963 (MA63) held a meeting pertaining to the first special cabinet meeting before presenting the outcome and details.

“But I have emphasised that it was the state’s rights and implemented under the Federal Constitution, Item 95C and Tenth Schedule List,” he stressed.

On the response from the special committee, he said: “They kept quiet. It is our right. Under the Constitution, we can even impose 10 per cent, but we considered the economic environment so we imposed five per cent.”

On another issue, Abang Johari pointed out that there is a formula of sharing between the Sarawak government and Petronas with regards to the Oil Mining Ordinance (OMO), considering the state’s interests in participating in the upstream and downstream industry.

“So, this is an ongoing discussion, but apparently, Petronas has indicated their concerns and sort of giving caution, but we want the discussions to be continued so (Minister of Economic Affairs Dato Seri Mohamed) Azmin (Ali) said he would tell Petronas to continue with the discussions,” he shared, adding that this was more of a commercial arrangement.

Dr Mahathir had, in the special cabinet meeting, agreed with the suggestion raised by Azmin for the discussion on matters related to petroleum be continued between the Sarawak government and Petronas.

Deputy Chief Minister Datuk Amar Douglas Uggah Embas, Minister of Tourism, Arts, Culture, Youth and Sports Datuk Abdul Rahman Karim Hamzah, Second Minister of Finance Dato Sri Wong Soon Koh and Assistant Minister of Law, State-Federal Relations and Project Monitoring Sharifah Hasidah Sayeed Aman Ghazali were present at today’s event. — DayakDaily