Sarawak expects to collect more than RM11bil next year, the most the state has ever booked, Premier Tan Sri Abang Johari Openg said while tabling an expansionary 2023 budget in the state assembly. For households across the state, the detail that matters is where the money goes: RM7.51bil is set aside for development, and 60% of that, or RM4.54bil, is earmarked for rural areas.
Where the tax money comes from
Taxes are projected to supply about 48% of revenue, or RM5.25bil. The state sales tax is the biggest piece at RM4.2bil, and most of it, RM3.2bil, is expected from crude oil, liquified natural gas (LNG) and petroleum products. Crude palm oil (CPO) and crude palm kernel oil add RM850mil.
The smaller sales tax lines are RM60mil each from lottery and aluminium products, RM22mil from coal and RM3mil from tyres.
Outside sales tax, the raw water royalty is projected at RM550mil. Forest royalty, timber premium and tariffs should bring in RM287mil, and mining royalties, land rents and similar items another RM21mil.
Non-tax income and the surplus
Johari put non-tax revenue at about RM5.5bil. Cash compensation in lieu of oil and gas (O&G) accounts for RM2.34bil, dividends for RM1.86bil, interest income for RM650mil and land premium for RM400mil. Licences, service fees, permits and rentals bring in RM129mil, while cash compensation in lieu of import and excise duties on petroleum products adds RM120mil. Federal grants and reimbursements are pencilled in at RM265mil.
Ordinary expenditure for next year is projected at about RM10.8bil. That leaves a surplus of RM238mil. The state economy is forecast to grow between 5% and 6%.
A better 2022 than planned
This year has run ahead of plan. Sarawak revised its 2022 revenue to about RM10.2bil, up from the original RM10bil estimate, on favourable O&G and CPO prices. By Oct 31 the state had collected nearly RM9.7bil, or 95% of the projection. Ordinary spending was also revised up, to RM10.7bil from RM10.65bil, an increase of RM60mil or 2.5%.
Water, wealth fund and federal asks
The Sarawak Water Supply Grid, which targets stressed areas through alternative funding, gets RM900mil in 2023. Projects include a 100 million litre mid-level reservoir and a nine million litre upper-level reservoir at the Matang water treatment plant in Kuching.
Sarawak will also set up a sovereign wealth fund with an initial RM8bil from the state consolidated fund. Annual top-ups follow: RM300mil in the second to fifth years, RM550mil in the sixth to 10th, and RM650mil in the 11th and 12th. The assembly passed the Sarawak Sovereign Wealth Future Fund Board Bill last week. “Ultimately, this will create an endowment to generate sustainable sources of income for future generations,” Johari said.
He also pressed Putrajaya on two points. Sarawak has sent the federal government a formula to review its special grants, and Johari asked for “due and serious consideration” of a proposal he called fair and equitable. The federal cabinet has agreed to seat Sarawak and Sabah representatives on the Inland Revenue Board, and he urged the new federal government to table the amendment to the IRB of Malaysia Act 1995 quickly. “The representation is necessary and critical to ensure Sarawak receives its rightful share in tax revenue returned to the state,” he said.
