Wong: Sarawak Government Should Explain The Hidden Anxiety From The Payment Of RM2 Billion Sales Tax

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Press Statement by Wong King Wei:

Stop clanking your champagne glasses.

This is a settlement outside of court, personally, it is good news to Sarawakians and hidden anxiety at the same time.

The good news is that Petronas has finally acknowledged that Sarawak has the right to impose the State Sales Tax, thus agreed to pay some RM2 billion in sales tax owed to Sarawak.

The hidden anxiety is that Sarawak has acknowledged that Petronas has the ownership over the oil and gas in the country. This indicates that Sarawak can no longer challenge Petronas over the oil and gas ownership in future.

Hence, it brings me to ask, is it really worth it to let go of our ownership at RM2 billion?

Who is the bigger winner in this case?

Let’s take a look at the following aspects:

  1. Petronas agreed to pay some RM2 billion, and this is based on the sales tax from the fiscal year of 2019. According to the 2019 State Budget, Sarawak is expected to generate RM3.897 billion from the State Sales Tax on petroleum products. It goes to show that the RM2 billion is about half of the expected revenue, and where is the remaining RM1.9 billion? If Petronas is not paying, where do we collect it from?
  2. In this settlement outside of court, the ownership of Petronas over the oil and gas is again acknowledged. This implies that Sarawak acknowledges that the Petroleum Development Act 1974, and will not be able to challenge this law. This is another hidden anxiety.
  3. This settlement includes the sales tax imposed on petroleum products after the fiscal year of 2019, and it is a mutual consensus reached between the Sarawak State Government and Petronas. But what exactly is the mutual consensus? This is not disclosed in the statement issued by the Sarawak Chief Minister. This should make another hidden anxiety for Sarawakians. The 2019 State Budget estimated to generate RM3.9 billion revenue from the sales tax but we received only RM2 billion. Now, the 2020 State Budget estimated to generate RM2.878 revenue from the sales tax, are we going to expect to collect a gravely discounted revenue?

Is Sarawak truly the bigger winner in this settlement outside of court? Sarawak State Government should have a lot to explain to Sarawakians.

Hence, stop clanking your champagne glasses until we settle the hidden anxiety mentioned above. Celebrations can wait.