CM says willing to slash petroleum sales tax if certain conditions are met


By Nigel Edgar

KUCHING, March 4: The Sarawak government is willing to negotiate with Petronas to reduce the 5 per cent sales tax on petroleum products if the national oil giant can give the state something of equivalent value.

Chief Minister Datuk Patinggi Abang Johari Tun Openg acknowledged the difficulties faced by Petronas and other oil and gas players following the imposition of the sales tax by the state government.


He, however, assured that he was flexible and willing to negotiate, as long as there is something in return for the state.

“I have enforced a 5 per cent sales tax on oil and gas. Of course, Petronas may not be happy. But then we want to share wealth together. It was not purposely done (to bully Petronas) because the question of royalty has been going ding dong — no conclusion.

“Therefore, we have to take another road by imposing the sales tax.

“Of course, the (oil and gas) players are also not happy. The reason is it may add cost to investors. But I am very flexible. As long as I get the revenue that is equivalent (I will reduce the tax rate).

“We can reduce the tax, but there must revenue equivalent (in return) because of the fact that oil and gas are within Sarawak’s territory,” he said during the official launch of the Brooke Dockyard’s Demak Fabrication Yard for the Bokor Structure Loadout here this morning.

Abang Johari activating the launch gimmick of the Brooke Dockyard’s Demak Fabrication Yard for the Bokor Structure Loadout as Brooke Dockyard and Engineering Works Corporation chairman Datuk Abang Abdul Karim Tun Openg (second from left) and Demak Laut assemblyman Dr Hazland Abang Hipni (left) cheer him on.

He told those present that one of the reasons he set up Petroleum Sarawak Berhad (Petros) as a regulatory body was so that Petronas would be able to work with it so that the state could benefit from the collaboration.

“I have indicated to the federal government of our desire to participate actively in both upstream and downstream.

“As far as downstream (is concerned), as you know, the state government is going to establish a methanol plant. We are working together with Petronas as our marketing agent because Petronas is good in marketing methanol from its Labuan facility and Sarawak is going to have our own facility to produce methanol,” said Abang Johari.

He explained that methanol is a base for other derivatives in petrochemical. Therefore, Sarawak’s direction is to participate in both downstream as well as upstream activities.

“The next issue is, of course, maintenance. That’s where people like Brooke Dockyard and other (Sarawak) companies can deliver the task of maintaining whatever facilities we have in Sarawak,” he pointed out. — DayakDaily