Friday, November 22

I will fight to the last, vows CM on Petronas paying 5 per cent O&G sales tax


Abang Johari being interviewed by reporters. — Photo by Roystein Emmor

KUCHING: Chief Minister Datuk Patinggi Abang Johari Tun Openg has assured that he will ‘fight to the last’ to get Petronas to pay the state’s sales tax on oil and gas exports.

He also called for patience on the part of Sarawakians in waiting for the national oil company to settle its sales tax, which the state government has set at five per cent.

“When Petronas operates in Canada, they have to comply with Canadian law and so when they operate in Sarawak, they must comply with Sarawak law; it’s as simple as that.

“If you breach the law, then the law has to take its course,” he said when responding to a question from the audience during a Q&A segment at the Business Engagement Session organised by Sarawak Business Federation (SBF), here yesterday.

Abang Johari said he had already submitted his formula to Prime Minister Tun Dr Mahathir Mohamad and the federal government, and told them that the Sarawak government had decided to only impose
a rate of five per cent even though there was no ceiling on the rate.

“I can impose 10 per cent but then taking into consideration the petroleum industry at the moment, we just impose five per cent on (O&G) exports.

“The total export revenue of Petronas through liquefied natural gas (LNG) is RM40 billion a year, so what is RM3 billion (in taxes compared) to RM40 billion? So we are very firm on this,” he said.

Under his formula, the chief minister said should the federal government request for a reduction in the sales tax due to certain economic circumstances, he would only consider doing so if Sarawak can get the equivalent via commercial agreements.

“We (can) reduce, but we can increase our equity in LNG. At the moment we have 25 per cent in LNG 3. In other words, what we are saying is, we can participate in upstream as well as downstream activities of our oil and gas.”

In terms of production sharing, Abang Johari said the Sarawak government would like to participate in the production-sharing formula as long as the mineral is extracted within Sarawak waters.

“Now it’s being negotiated. I hope things will be okay so just bear with me. I will fight to last to get that sales tax for Sarawak,” he stressed.

Meanwhile, the chief minister was also asked for his take on whether the decision to cap the price of RON95 petrol in the state at RM2.08 per litre would benefit Sarawakians and result in lower prices for goods compared to Peninsular Malaysia.

“I’m not very sure because once you cap the price like that, there is no flexibility in the retail price of RON95. I hope the Deputy Minister will fight for us,” he said, referring to Domestic Trade and Consumer Affair’s Deputy Minister Chong Chieng Jen.

“Until they (federal government) implement it, we don’t know whether we will have the advantage or not because there is no flexibility.”

SBF president Datuk Abang Abdul Karim Tun Openg and SBF deputy president Datuk Philip Ting were among those present during the session, which featured two key speakers in State Legal Counsel Dato Sri JC Fong and Professor Dr Fatimah Kari of the Faculty of Economics and Administration at University of Malaya.