Pakatan Harapan Promises 20% Oil Royalty

(Hornbill Unleashed, October 2017) – Pakatan Harapan, in its Alternative Budget 2018, said it will offer 20 percent royalty to oil-producing states Kelantan, Terengganu, Sabah and Sarawak.

However, the coalition also indicated that it may scale back federal allocation with the increased oil royalty to the states.

“Pakatan Harapan agrees in principle to increase the royalty rate to 20 percent.

“However, we are mindful that we also have to ensure the fiscal budget and Petronas are not irreparably damaged by such an arrangement.

“Accordingly, these oil-producing state governments are expected to take on more budgetary expenditure.

“The marked difference is that these state governments will have elective powers over what best to spend on,” Harapan said in its Alternative Budget 2018 document.

Sabah and Sarawak are currently paid five percent in royalty, while Terengganu receives a contribution from the Federal Government for oil extracted off its coast. Kelantan, however, is deprived of any form of payment.

It also noted that the Sabah and Sarawak government want to create their own equivalent oil and gas operations, similar to Petronas.

Harapan said in the event that it agrees to this, then the computation of the oil royalty rate for East Malaysia will have to be adjusted.

Kelantan and Terengganu have been denied oil royalty during the period when PAS governed the states, which coincided with Dr Mahathir Mohamad’s tenure as prime minister from 1981 to 2003.

Mahathir is now the Harapan chairperson.

The Harapan Alternative Budget also said it would spend RM58.35 billion on development expenditure with a focus on the poorest states in Malaysia.

“We recognise the six poorest states, namely Sabah, Kelantan, Sarawak, Kedah, Terengganu and Perlis require the most developmental help.

“As such, Harapan is committed to directly channelling 60 percent of the development expenditure, or RM35.01 billion to these six states,” it said.

It added that Sabah and Sarawak will receive 25 percent respectively from this portion of the allocation.