On Anwar Ibrahim’s Promise of 20% Oil Royalty to Sabah

ARCHIVES 2012

By MT Webmaster On Feb 14, 2012

Rahman Dahlan, Malaysian Digest

Datuk Seri Anwar Ibrahim has been quoted that he would increase Sabah oil royalty from 5% to 20%. Other opposition leaders like Datuk Dr Jeffrey Kitingan went even further by promising 50%. But in order to achieve this, Dr Jeffrey has to depend on Anwar’s support if and when he becomes the Prime Minister of Malaysia.

As an MP from Sabah, I do not have any reason to reject such proposal. After all, Anwar wants to give more funds to Sabah. Or does he? Unfortunately, I am painfully aware that Anwar has not been fully forthcoming in his proposal to increase oil royalty for Sabah.

Last year, in Parliament, I posed a question that if Anwar increased Sabah’s royalty to 20%, could he guarantee that he would not reduce Sabah’s existing percentage of allocation in his federal budget for 2013 or in the 11th Malaysia Plan? I reminded the opposition that Sabah had been consistently given biggest percentage of allocation by the federal government both in the Malaysia Plans and its annual budget. For example, Sabah received RM20.3bil out of RM230bil in RMK9 and in First Rolling Plan of RMK10, Sabah received RM10.7bil out of RM98.5bil.

My concern is, while Anwar may increase Sabah’s share of the oil royalty, there is no guarantee he may not reduce Sabah allocation in his federal budget 2013 or the 11th Malaysia Plan. If that is the case, Sabah coffers may end up being the same or even worse off! That is why I asked for a guarantee. None of the opposition MP at that time stood up to reply to my argument.

Increase in royalty for Sabah, Sarawak, Terengganu and Kelantan would easily amount to more than RM10bil a year. (Bear in mind Sarawak and Terengganu produce more oil than Sabah). Anwar knows very well that the additional of more than RM10bil given to the four oil producing states means RM10bil have to be taken away from the budget of non-oil producing states in West Malaysia.

I do not think Anwar dare to say to the people from the non-oil producing states, “I am sorry, I have to cut your allocation because I need to give more than RM10bil to Terengganu, Kelantan, Sarawak and Sabah!” The people there will reject him and this is not acceptable to him since he needs their votes desperately to win Putrajaya.

It is then very likely that Sabah may be getting higher oil royalty but in the end will get lower overall funds from Federal Government under Anwar’s Prime Ministership. So far he has not given Sabahans a guarantee that this will not happen!

You and me know that for every ringgit given to Sabah, Sarawak, Terengganu and Kelantan, that one ringgit must come from somewhere. The money does not fall from the sky. Some states must be willing to sacrifice their portion of the federal budget. Some projects in West Malaysia must be cancelled. The question is who and what needs to be sacrificed? Or will Anwar spend less on security, health, education, infrastructure, public utilities, social etc. given the fact he has to spend more on royalty?

Anwar must answer these tough questions so that people understand and convinced. Remember, Anwar wants to maintain subsidies, refuses to increase taxes, is against higher government’s debt and proposes spending more on royalties. How in the world is he going to juggle these finances? And Sabahans still remember how Anwar as Finance Minister and Deputy Prime Minister consistently refused PBS’ request for higher royalty. Will he now apologize for his “misguided” action? Pakatan Rakyat has also said that “savings” or “proceeds” in billions of ringgit from their anti-corruption drive and renegotiation lopsided deals will be used to finance the increase in royalty.

As someone who sits in MACC committee, I hope they will succeed. Any effort to eradicate corruption must be supported and encouraged. I am sure Sabahans share the same view as mine. But my concern is not about the effort to check corruption. It is more about Anwar’s rationale to include “savings from corruption eradication and renegotiating lopsided deals” as part of his government’s revenue.

Can Anwar estimate how much yearly savings he gets from anti-corruption effort? Can he comfortably project such revenue with a high level of accuracy? Would it be sensible to use the figure to plan his national budget?

Can Anwar force those IPPs and highway toll concessionaires to renegotiate their agreements immediately after he swears in as Prime Minister? Or will he face prolonged and protracted battle which could take years to settle?

If yes, will his budget revenue projections fall short and hence disturb his spending plans including payment of additional royalty?

To be honest, I have never heard any government around the world using projected “savings from corruption” as the basis of preparing its national budget. That is utterly irresponsible. The budget will be in a mess. Any “savings” due to anti-corruption drive should be construed as “bonus” revenue, and should not be included in the estimation of government’s budget revenue. So when Anwar says he will finance the royalty increase from “corruption eradication savings”, one has to be worried.

My view is if Anwar intends to stick to his promise, he has no choice but to eventually cut allocations meant for the non-oil producing states (Johor, Pahang, Melaka, Negeri Sembilan, Selangor, Perak, Kedah, Penang, Perlis and Wilayah Persekutuan). This is a very possible scenario!

Of course, the other alternative is to cut allocations to critical sectors like education, rural infrastructure, health and security across the board, which is equally a disastrous scenario. Either way, the non-oil producing states and Malaysians in general, deserve to know the facts. The next sitting of Parliament in March will be the best avenue for Datuk Seri Anwar Ibrahim to clarify to the nation. Failing which, I will be asking him directly because I do not want my fellow Sabahans to fall for trickery and deceptive political promise.