Recently on November 6 during the tabling of the Supply (2019) Bill at the Sarawak Legislative Assembly Chief Minister Datuk Patinggi Abang Johari Tun Openg announced Sarawak will tap into a new major revenue stream with the introduction of a 5 percent sales tax on petroleum products effective January 1 2019.
He said the revenue expected from the imposition of sales tax on these petroleum products is estimated to be around RM3.897 billion in 2019.
Subsequently, there were calls that Sarawak’s new revenue stream should be spent by distributing it among its 2.7 million citizens.
This is indeed a noble thought.
This type of cash handed out by a government is usually termed as “Unconditional Cash Transfers” to its citizens.
It would not be a means-tested benefit and there are no criteria on how it should be spent. I am sure it would be very popular and of course much appreciated by all including my family, friends and myself.
But would this be the best use of this RM3.897 billion?
While I would have no objection to receive my share as a Sarawakian very happily, is this the best use for our new source of revenue?
Would I start expecting it every year? Most likely, yes, at least subconsciously. Would I be disappointed if I don’t get it the following year? Again most likely, yes, very consciously! We will all get used to receiving it and will keep expecting it every year.
Perhaps a better use would be if a specific sum is set aside for those in chronic poverty to be distributed by our welfare department.
An additional specific sum could be used to set up the much talked about fund modelled on the Norway Government Pension Fund Global more commonly known as the Oil Fund. They established it in 1990 whereby the surplus revenues from the Norwegian petroleum revenue were invested.
This Oil Fund now has over US$1 trillion in assets, that is almost RM4.2 trillion at the current exchange rate (even Jho Low must be salivating by now) according to a Wikipedia posting. This makes it the world’s largest sovereign wealth fund.
The majority balance of the sales revenue should be used for Sarawak’s development. Since we are far behind Malaya in our development, not to mention the region, we need to invest in useful physical infrastructures for all Sarawakians for several years to come.
This will ensure that a good economic and social ecosystem can grow year on year, thereby providing all with much better opportunities.
This approach would be the most prudent approach and would bring benefits to many generations to come and also would make us more independent as individuals.
The federal budget for Sarawak in 2019 already shows there is no great and lasting love coming our way from Malaya. We obviously cannot wait for this love to develop since it did not happen over the last 55 years.
Sarawak cannot at the moment afford to lavish any revenue on this type of “Unconditional Cash Transfers” at this large a scale. It’s akin to a person winning a lottery and losing it quickly due to an inability to manage the winnings and in the case of Sarawak, well-deserved winnings.
It was heartening to read a few days ago that Abang Johari said: “With the revenue from this sales tax, we can further develop our state of Sarawak.”
Most importantly, of course, is that the Chief Minister has committed to utilising this sales tax revenue for major development programmes and projects as mentioned in his budget speech.
He stated that the focus is on accelerated development to be at par with that of Peninsular Malaysia; narrowing the disparity gap between the urban and the rural areas; improvement in the quality of life of the people especially the rural community, and achieving the state’s vision to become a high income state by the year 2030.
You might at this point say why then create such hue and cry about how the sales tax revenue should be spent if it is already decided by our government to spend it so well.
Well, in politics, circumstances can derail the best of plans and intentions. The pressure for quick fixes is always there.
I am not advocating that there should never be any sharing of wealth with the people, merely that let us wait for better times. It is easy to be nice by giving cash handouts to all, but the consequences, in this case, would not benefit us in the long term.
Ultimately, leadership can sometimes be about making tough choices between being nice or being wise. In this case, so far it’s wise.
