State Financial Secretary’s Office: RM745 mln in shortfall for 2021 State revenue, not RM2.4 bln as estimated

Wisma Bapa Malaysia

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KUCHING, Dec 2: The Office of the State Financial Secretary has revised the estimated 2021 State revenue down to RM8.365 billion with a shortfall of RM745 million in revenue collection for 2021 and not RM2.4 billion as claimed by Padungan assemblyman Chong Chieng Jen.

In a statement today, the Office said that the revision, which was done following the unfavourable outlook and poor performance of the global economy that had impacted recovery, had been reported during the Special Session on 2022 Sarawak Budget presentation held in October 2021 and stated in the Estimates of Revenue and Expenditure Book, 2022.

The major contributors to Sarawak revenue are mainly royalty on oil and gas, State Sales Tax (SST), dividend recipients, interest income, royalty on raw water and land premiums.

“The shortfall of RM745 million was mainly contributed by SST of 59 per cent, dividend receipts of 33 per cent, and interest income of 12 per cent.

“Variances in revenue from SST were due to lower collection from tax on crude petroleum and LNG, lottery, aluminium and tyre,” the Office disclosed.

As for dividend receipts, the Office informed that the lower collection was due to the economic slowdown affecting the performances of oil and gas companies and other State investments.

With regard to interest income, low Overnight Policy Rate (OPR) in 2021 at an average of 1.75 per cent per annum has also affected earnings from interest income.

When the 2021 State Revenue Estimates were prepared in 2020 at RM10.012 billion, the Office explained that the key assumptions made in the preparation of the 2021 State Budget were based on the available information and trend forecast on the immediate and near-term outlook of global economic projection and commodities prices.

At that time, it said that the global economy was then expected to recover in 2021 with projected growth of 6.0 per cent by the International Monetary Fund (IMF).

“Malaysia’s economy was then expected to grow between 6.5 per cent and 7.5 per cent in 2021, while Sarawak’s economy was expected to grow between 6per cent and 8 per cent.

“However, the Covid-19 pandemic was more persistent and has plunged most countries into recession.”

In addition, the Office emphasised that the rapid spread and threat of new variants have increased uncertainty about how quickly the pandemic can be overcome.

“In 2021, we had seen many lockdowns worldwide that restricted global business activities and led to supply disruptions, due to decrease in production in most sectors. This was felt by Sarawak with the drop in production of oil and gas which in turn affected our income from royalty on oil and gas and State sales tax from crude petroleum and LNG.” — DayakDaily