See praises state’s fi­nan­cial achieve­ment, urges cau­tion on re­serves man­age­ment

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SEE Chee How ( PKR-Batu Lin­tang) has com­mended the state ad­min­is­tra­tion for the fi­nan­cial per­for­mance this year.

Ac­cord­ing to See, the state has an in­crease in re­vised rev­enue by RM779 mil­lion and no re­vi­sion in or­di­nary ex­pen­di­ture and the 2017 re­vised bud­get is ex­pected to reg­is­ter a sur­plus of RM394 mil­lion against the orig­i­nal es­ti­mated deficit of RM385 mil­lion.

“There is a pos­i­tive gain in the ac­tual rev­enue from the hill tim­ber premium com­par­ing to the es­ti­mated in­come from the same source, to the tune of RM93.8 mil­lion,” he said in his de­bate on the state bud­get dur­ing the State Leg­isla­tive Assem­bly sit­ting yes­ter­day.

How­ever, See pointed out that the RM100 mil­lion rev­enue from hill tim­ber premium ap­pears to be far short of the re­vised tar­get of RM300 mil­lion.

“And the in­crease in rev­enue earn­ing from hill tim­ber premium was com­pletely off­set by the re­duc­tion in rev­enue earn­ing from other for­est and tim­ber pre­mi­ums, and most par­tic­u­larly the de­vi­a­tion of 34.25 per cent from the es­ti­mated to ac­tual col­lec­tion of for­est roy­alty by RM178.15 mil­lion. The es­ti­mated rev­enue was RM520.15 mil­lion but the ac­tual rev­enue col­lected is only RM342 mil­lion.”

See said not only was the ac­tual col­lec­tion far short from that bud­geted; it was a 30 per cent drop in rev­enue col­lec­tion from last year, which is not pro­por­tional to the log pro­duc­tion.

“I will be most grate­ful if the hon­ourable min­is­ter will en­lighten us on the rea­sons for the plunge in the roy­alty col­lec­tion, whether it is due to the ram­pant il­le­gal log­ging which is al­ways the main cul­prit.”

With re­gards to com­bat­ing il­le­gal log­ging, See said it was no­ticed that the state ad­min­is­tra­tion ap­peared to have adopted a dif­fer­ent pol­icy from the for­mer ad­min­is­tra­tion which had frozen the is­suance of Oc­cu­pa­tion Tick­ets (OTs) and Let­ters of Au­thor­ity ( LAs) for short-term tim­ber log­ging, iden­ti­fied as the main cause for il­le­gal log­ging.

“It was an­nounced in Fe­bru­ary that short-term tim­ber li­cences will be is­sued through open ten­der process. I hope the hon­ourable min­is­ter will en­lighten this House on the num­ber of Oc­cu­pa­tion Tick­ets (OTs) and Let­ters of Au­thor­ity ( LAs) for short­term tim­ber log­ging, whether is­sued through open ten­ders or oth­er­wise, that were is­sued this year and how many of those OTs and LAs are still sub­sist­ing to­day. Im­por­tantly, how will the new ar­range­ment al­le­vi­ate the prob­lem of il­le­gal log­ging in the state?”

He said it is, how­ever, clear that the bright­est spark in terms of per­for­mance in rev­enue gen­er­at­ing for 2017 is the state’s earn­ings from in­vest­ments and in par­tic­u­lar, div­i­dends, which saw ac­tual rev­enue earn­ing of RM1.5 bil­lion.

“This is 198.6 per cent or al­most dou­ble the es­ti­mated div­i­dend earn­ing, RM755 mil­lion pro­jected in our bud­get 2017. I must con­grat­u­late the Right Hon­ourable Chief Min­is­ter, the Hon­ourable Sec­ond Fi­nance Min­is­ter and the Hon­ourable State Fi­nan­cial Sec­re­tary for their com­mend­able lead­er­ship.

“At the same time, I must put on record our ap­pre­ci­a­tion to the staffs in the fi­nance min­istry, de­part­ments and of­fices for their hard work which have borne this re­mark­able fruit.”

See said all other states in the Fed­er­a­tion will be en­vi­ous of Sarawak for its feat, earn­ing a whoop­ing RM2.511 bil­lion in­ter­est and re­turn on in­vest­ments, which is more than eight per cent re­turns this year from the in­vest­ment of state re­serves.

“I pray that the state will con­tinue with our pru­dent and sound fi­nan­cial man­age­ment of our state re­serves and fi­nan­cial re­sources. This is the cru­cial hall­mark and lever­age for Sarawak and it cer­tainly au­gurs well in our quest for our de­mand for greater au­ton­omy and de­vo­lu­tion of pow­ers that Sarawak is more than ca­pa­ble of man­ag­ing and ad­min­is­ter­ing the fis­cal pow­ers that will be de­volved to Sarawak.

“This im­pres­sive re­turns from the in­ter­ests and div­i­dends of our in­vest­ments is piv­oted on the equally no­table sum of state re­serves that we have saved over the years, which I must cau­tion the Right Hon­ourable Chief Min­is­ter and the state gov­ern­ment to zeal­ously guard and pro­tect it, to con­tinue and ad­vance the present pru­dent and sound fi­nan­cial man­age­ment to en­sure that it will con­tinue to earn the in­ter­ests and div­i­dends which is much needed for the con­tin­u­ous de­vel­op­ment of Sarawak.”

In this re­gards, See pointed out the fal­lacy or mis­con­cep­tion that the state could have earned more by can­ni­bal­is­ing the state re­serves through fi­nanc­ing state projects.

“It must be borne in mind that even though our sav­ings with the com­mer­cial banks can earn only up to 3.8 per cent in­ter­est per year and our bor­row­ings can at­tract up to seven to eight per cent in­ter­est per year.

“How­ever, the com­mer­cial banks that lend their money to us are to bear statu­tory re­serves to the Bank Ne­gara, the ad­min­is­tra­tive costs and the un­fore­seen risk fac­tors in bad loans and de­fault in pay­ment.”

See said the records pub­lished have shown that com­mer­cial banks would only lend out up to 15 per cent of the sums de­posited with them.

“Com­par­ing to the Fed­er­a­tion, fromthere­cent­lyre­vealed­na­tional bud­get 2018 which was passed yes­ter­day, our na­tional debt is pushed to be­yond RM600 bil­lion and the gov­ern­ment guar­an­teed bor­row­ings have reached RM285 bil­lion. How­ever, the coun­try has a na­tional for­eign re­serves fund of RM450 bil­lion.

“The fed­er­a­tion has main­tained re­serves in the tone of RM450 bil­lion for quite some time, with no in­ten­tion to can­ni­bal­is­ing it to fi­nan­cial na­tional projects to re­duce the in­ter­ests to be ex­pended on fi­nanc­ing them.

“We must there­fore be cau­tious in the man­ag­ing of our state re­serves. It sounds well and good to say that we can make use of our re­serves to fi­nance projects such as the re­pair and re­build­ing of di­lap­i­dated schools if the fed­eral al­lo­ca­tion does not ma­te­ri­alise.

“With re­spect, the pru­dent ap­proach is to ap­proach the friendly for­eign banks, bank­ing in­sti­tu­tions, in­ter­na­tional money mar­kets and funds to se­cure the fi­nance which at­tracts the low­est in­ter­ests, and that we re­quire the fed­eral gov­ern­ment to stand as guar­an­tor for the bor­row­ings. This is one other func­tion that the state re­serves play and serve as well. With our high state re­serves and pru­dent man­age­ment, we are rated highly, higher than the fed­er­a­tion, with all due re­spect.”

See said: “Moody has rated us ‘A- with pos­i­tive out­look’ while the fed­er­a­tion man­ages an ‘A- with sta­ble out­look’ be­fore the Bud­get 2018, which there­after has caused the rat­ing agency to cau­tion that ‘The full credit im­pli­ca­tions of the bud­get will de­pend on whether the pro­jected in­crease in rev­enues - the fastest since 2012 - is achiev­able since tar­gets rest pri­mar­ily on a rise in GST col­lec­tions, which in turn rely on rel­a­tively op­ti­mistic growth pro­jec­tions go­ing into 2018.”

“An­other in­ter­na­tional rat­ing agency, Fitch, has equally cau­tioned: We see down­side risk to the gov­ern­ment’s op­ti­mistic rev­enue pro­jec­tions. Its 2018 GDP growth fore­cast of 5 to 5.5 per cent as­sumes that strong re­cent mo­men­tum will be main­tained, but there could be some head­winds from cool­ing ex­ter­nal de­mand.

“I hence­forth pray that our state re­serves will be main­tained and strength­ened, to make use of our strong stand­ing to at­tract more in­vest­ments and fi­nan­cial re­sources for the needed state projects, for the greater ben­e­fits of Sarawak.”

See (left) and Krian as­sem­bly­man Ali Biju stop for a photo-call at the DUN Com­plex foyer at the end of day five of the DUN sit­ting.

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