Engineering new revenue streams to strengthen development

Abang Johari (sixth left) offically launches Petroleum Sarawak Berhad in this file photo. Photo Credit: Sarawak Public Communications Unit (UKAS)


With the federal government’s purse strings appearing increasingly tight over the funding of development and infrastructure projects in Sarawak, the state government has undertaken new measures to widen its revenue base to generate more income to develop the state, especially in rural areas.

Among the many bold measures taken by Chief Minister Datuk Patinggi Abang Johari Tun Openg was imposing 5 per cent sales tax on exported petroleum products, which he announced during the state 2019 budget speech.

The move however has led to an ongoing legal standoff with national oil corporation, Petroliam Nasional Berhad (Petronas) which has been defiant in not wanting to pay the 5 per cent sales tax as of to-date.

Despite this, Abang Johari has stood firm and stated that he will fight for every ringgit and sen from the national oil company as well as for more development funds from the Pakatan Harapan (PH) federal government.

Commenting on the state government’s effort in pursing the 5 per cent sales tax from Petronas, Federation of Chinese Associations of Kuching, Samarahan and Serian Divisions’ president Datuk Richard Wee opined, “I think the state government had consulted all the various legal experts before they implemented the 5 per cent sales tax.

“In my opinion, I believe the law is on our side although I am not a lawyer.

“If they (federal government) decide to take the matter to the court, it is something that our state government has not much choice but will have to deal with. It is unfortunate that it has to take that route.

“For this year, we hope that we will be able to try to resolve this matter and move forward.

“As we talk about the new year, new hope and all that, we hope that West Malaysia’s problems — whether religious, racial, or education — we really hope that the federal government through the wisdom of their ministers will find a solution or resolutions to all the unnecessary issues which have popped up.”

Wee opined that the focus should be on improving the country’s economy and well-being, and that Malaysia needs to have stable and realistic policies to move forward rather than having to deal with all these unproductive issues.

“I hope the education, racial, and religious issues will be able to be resolved (by the federal government) in 2020.

“For Sarawak, we hope that in 2020, we will continue to fight for what is Sarawak’s rights and what we are entitled to and that is something which I don’t think any Sarawakian will be able to compromise on.

“We hope that all Sarawakians will continue to stand solidly behind the state government’s resolve to try to fight for the interests of Sarawak,” he said.

Reclaiming control to fund development

E11 Platform Complex, Baronia oilfield in Miri. — file pic

Abang Johari, who has received strong widespread support across all sections of society to reclaim Sarawak’s rights, is adamant that there is a strong case for Sarawak to pursue the issue of a greater share of revenue from the extraction of mining resources in Sarawak’s territory with the federal government.

During his 2020 state budget speech, he announced that the Sarawak government will be imposing 1 per cent sales tax on aluminium products exported from Sarawak this year.

Additionally, the state government had in 2018 acquired an additional 15 per cent stake in Malaysia LNG Tiga Sdn Bhd, from 10 per cent previously, to increase its revenue.

Those efforts are expected to generate billions for the state’s coffers and enable the state government to fund more infrastructure projects for the people.

On top of that, the Sarawak government wants to build a long-term revenue stream through participation in upstream and downstream activities of the O&G industry.

With a clear strategy in mind, Abang Johari launched Petroleum Sarawak Berhad (Petros) in 2018.

He outlined that in the coming years, Petros will be more active and have greater participation in the O&G and petrochemical industries as more investments are being implemented.

Commenting on the establishment of Petros, Sarawak Housing and Real Estate Developers’ Association (Sheda) Kuching branch chairman Sim Kiang Chiok said: “Petros was formed to assist the Sarawak government to restore our mining rights in our O&G industry for the benefit of all Sarawakians.

“Petronas will have to apply for the O&G mining licence from Petros and have to reimburse 5 per cent sales tax to the Sarawak government apart from the 5 per cent oil royalties.

“This is good for all Sarawakians as we will have additional income for the transformation of of Sarawak into a developed state.”

Meanwhile, Plaza Merdeka Holdings Sdn Bhd managing director Datuk Steve Ng observed that Abang Johari was doing his best to reclaim what Sarawakians were entitled to and deserved to have for the development and prosperity of the state.

He expressed full support for all efforts in this regard and emphasised that Abang Johari and the state government deserved Sarawakians’ fullest and unwavering support to see these efforts through.

Harnessing hydro power generation to benefit the people

While Petros will be tasked to oversee domestic O&G, the state government has also taken the initiative to manage domestic power generation.

In August 2017, the state government took full control of the 2,400 megawatt (MW) Bakun dam from the federal government through Sarawak Energy Berhad (Sarawak Energy) to administer the state’s power generation and electricity supply.

Aerial view of Bakun Dam. – file pic

With the asset now in the hands of the state government, Sarawak can better manage its resources and provide better electricity coverage and at affordable rates for the people, especially those in the rural areas.

Abang Johari noted, “We took over Bakun from the federal government, meaning we have control of our energy. And also we can decide whatever we want to do with our energy, including setting tariffs.

“That is why when people want to increase tariffs throughout Malaysia, Sarawak is exempted because our tariff is determined by Sarawak. And when we have our energy under our control, then the cost is definitely determined by us, particularly for the investors.”

He pointed out that with highly energy intensive industries coming to Sarawak, the state having control over its energy resources means it can decide the type of tariffs to impose to spur and manage strategic investments in Sarawak. It will also allow Sarawak to plan its energy development.

The hydropower dams in Batang Ai, Bakun, and Murum as well as the dam being constructed in Baleh also mean that Sarawak is in a good position to sell renewable energy produced to its neighbours to generate additional revenue for the state’s coffers.

“Now we are selling to Kalimantan Barat, Indonesia. And we are negotiating because our neighbours also need energy.

“There is what we call mixed energy source like Brunei. So, we are collaborating with Brunei, discussing with Brunei on how we can work together to supply energy to our neighbour,” Abang Johari told the media recently.

Apart from that, these renewable energy assets will also aid Sarawak’s capability to implement power connectivity in this region through the Trans Borneo Interconnection Power Grid as envisioned by Abang Johari.

During a press conference in 2015, Abang Johari, who was then the Tourism Minister, revealed that Sarawak together with Sabah, Brunei and Kalimantan, Indonesia have begun to roll out the Trans Borneo Interconnection Power Grid, which aims to connect the whole of Borneo with a power grid by 2025.

Sim, who is also a corporate figure asserted, “Our Chief Minister is making all the brave, smart and correct moves to protect our rights and to increase our revenues to fund development and to improve the social economic wellbeing of Sarawak towards a developed state.”

Since helming Sarawak, Abang Johari has come up with 81 initiatives.

The 81 initiatives encompass various aspects of building up Sarawak, such as regaining Sarawak’s lost rights, leapfrogging the state’s digital and technological development as well as revenue re-engineering, injecting funds to boost infrastructure in rural areas, fair religious and racial policies and many others.— DayakDaily