Revenue from petroleum sector to double to RM60 billion this year

This is thanks to the steady rise in global oil prices, currently hovering around US$79.41 per barrel.

Petroleum income is likely to increase its share of government revenue from 15% to 25%. (Reuter pic)

KUALA LUMPUR: The revenue derived from the petroleum sector this year will almost double to an estimated RM60 billion against RM38 billion raked in last year, thanks to the steady rise in global oil prices which is currently hovering around US$79.41 (RM315) per barrel.

This is good news for Malaysia, which is a net oil exporter of crude oil.

It will also complement the newly-formed government’s move to abolish the 6% goods and services tax.

Hermana Capital Bhd CEO and chief investment officer Nazri Khan Adam Khan said the RM38 billion revenue was earned from the petroleum sector when crude oil prices were fetching US$52 per barrel.

“That (the revenue) is like 15% of government revenue… and with oil prices now trading at about US$80 per barrel, the government’s petroleum revenue would likely increase the share to 25%.

“And this revenue does not include the dividend accrued from Petronas,” he told Bernama today.

Besides, the government would also have additional revenue now with the re-introduction of the sales and services tax (SST).

The finance ministry yesterday said fiscal reform initiatives are under way following the announcement that the GST would be zero-rated effective June 1, 2018.

Under former Prime Minister Najib Razak’s administration, the government collected RM44 billion from GST in 2017, slightly higher compared with RM41 billion in 2016.

The GST was implemented on April 1, 2015 to replace the SST in Malaysia. Malaysia was among 160 other countries which had already implemented it.

Najib had said then that with the introduction of the GST, the government would be able to resolve weaknesses in the current taxation system, such as the impact of double taxation, absence of full tax relief on exported goods and issues over transfer pricing.

“If we were to buy a carbonated drink in a restaurant today, we are paying double taxes – sales tax and service tax,” he pointed out. “With the GST system, consumers will only need to pay tax once, and the price of goods should be cheaper,” he was quoted as saying when presenting the 2014 Budget in Parliament.

Nazri said the abolition of the GST would boost the economy, buying sentiment and reduce property prices.

Meanwhile, former Bank Negara governor Zeti Akhtar Aziz said Malaysia would be able to meet its revenue requirements even after shelving the GST by prioritising projects, increasing public sector efficiency, avoiding wastage and exploring new sources of revenue. - FMT