On 4 December, Premier Tan Sri Abang Johari Openg unveiled Sarawak’s 2023 budget, aiming for RM11 billion in revenue for the coming year. The projection is built on three pivotal assumptions: global commodity prices will remain favourable, oil output will stay consistent, and the recently introduced state sales tax will deliver the expected haul.
Taxes are slated to generate just under half of the target amount – RM5.25 billion. The cornerstone of this tax revenue is the state sales tax, projected at RM4.2 billion, a figure that hinges on continued payments from firms involved in crude‑oil extraction, liquefied natural gas (LNG) production and palm‑oil processing. A downturn in international energy prices would directly erode this income stream.
Other tax‑related receipts are comparatively modest. Coal is expected to contribute RM22 million and tyres RM3 million, while royalties from raw water, forests, wood, mining and land leases together total about RM287 million. These smaller streams are nonetheless dependent on ongoing resource extraction and related legal frameworks.
Non‑tax revenue is forecast at RM5.5 billion. The largest component, amounting to RM2.34 billion, is cash compensation from the federal government in lieu of oil and gas royalties – a negotiated payment rather than a market‑derived figure, making it vulnerable to any shift in federal‑state relations. Dividends from state‑owned enterprises are slated to add RM1.86 billion, interest income RM650 million, and land‑premium receipts RM400 million. Additional sources include RM265 million in federal funds and reimbursements, a RM120 million cash compensation for the loss of import and excise duties on petroleum products, and RM129 million from licences, service fees, permits and leases.
On the expenditure side, regular outlays are set at roughly RM10.8 billion, with development programmes earmarked for RM7.51 billion. This leaves a projected surplus of only RM238 million – a thin margin that could be wiped out by any shortfall in the revenue assumptions.
The development allocation translates into tangible projects such as new roads, schools, water‑supply schemes and power‑line extensions. If revenue falls below expectations, these initiatives may face scaling‑back or delays, creating a feedback loop where slower infrastructure growth could further dampen economic activity.
In addition to the major revenue streams, the budget lists a RM60 million contribution from the state lottery and a nominal RM60 billion figure for aluminium products, which appears to be a typographical error in the original document.
Key risk factors to monitor include: the trajectory of global crude‑oil and palm‑oil prices throughout 2023, the outcome of federal budget negotiations in Putrajaya, and the effectiveness of the state’s sales‑tax collection mechanisms in achieving the RM4.2 billion target.
Overall, Sarawak’s ambitious RM11 billion goal represents a record‑setting fiscal target for the state. Its success will depend on the stability of commodity markets, the reliability of federal transfers, and the efficient administration of the new tax regime.
