A sum of RM 316.55 bil. is allocated for Federal Government Expenditure in 2019, an increase of 12.15% over the 2018 figure, though the people were actually braced for a more austere budget following discoveries of cases of ‘misappropriation of funds’ and ‘misinformation on government debts level’ committed by the previous BN Government. This is also achieved in spite of the scrapping of GST which started last year.
How did the Federal Government achieve this? From a quick research done, there should be a big net reduction in government revenue by approximately RM 21 bil following the introduction of SST that replaced GST. This is a huge gap that should necessitate an increase in other taxes or a windfall from Petroleum revenue sources, and it will be hard to imagine such tax increases without widespread protests from the people. Hence, the government increased some minor duties and taxes, but these can only raise minimal amount for the federal government revenue.
An analysis of the budget figures however indicates that the revenue shortfall is met by increase in PETRONAS contribution to the Federal Coffers from an expected increase in Oil and natural gas prices as well as a special dividend of RM 30 bil from PETRONAS. Apparently, the special dividend is provided from uncommitted financial reserves of PETRONAS, which is fast dwindling if this practice continues. From my analysis of PETRONAS Balance Sheet for the year 2017, such a special dividend, as expected, is not sustainable and would not likely be available in future budgets. For this reason, budget for the next few years are likely to be more austere, unless there are large increases in Federal Government debt.
Unwilling as they are though, through the above huge PETRONAS contributions, Sarawak, Sabah and other poor Petroleum states have again been forced to come to the rescue of Federal Government to meet an equally huge appetite of the already rich Peninsular states. And this has been going on for the last thirty five years!!!
As for the Development Expenditure, it amounts to RM 56.4 bil of which Sarawak is only allocated a sum of RM 4.3 bil, the same amount as last year, and Sabah RM 5 bil.(It is not clear whether the above is inclusive of the estimated RM 2.5 bil annual allocation Sarawak would be receiving for the development of Pan Borneo Highway). This is an unfair distribution since it means Peninsular Malaysia obtains the much larger share of RM 47.1 bil of the Development Budget in spite of gross imbalance of the development stage of the three territories of the country. The Pakatan Harapan Government is seen here repeating the follies of the previous government with respect to the Borneo territories which is obviously against the spirit of equal partnership under Malaysia Agreement (MA 63).
Sarawakians note that should the Pakatan Harapan or Barisan Nasional Election Manifesto be fulfilled, our state should be receiving approximately RM 6.5 bil annually in additional Petroleum Royalty which is badly needed to catch up with Peninsular Malaysia’s infrastructure and socio-economic development. The way the development expenditure is allocated indicates that we have been short changed. The Federal Government is still not sensitive to our needs, and needless to say the needs of Sabah and the other petroleum producing states in the Peninsula.
DAH IKHWAN
Please also read:
2.Petroleum Royalty: Petronas vs Producing States.
