‘Sarawak to continue its expansionary fiscal policy through substantial development budget’

“In light of this, the state will continue with its expansionary fiscal policy with a substantial development budget of RM9.073 billion in 2019, the biggest in the history of Sarawak,” he said when presenting Supply Bill ( 2019) in the august House yesterday.

According to him, the 2019 State Budget proposal is indeed ‘an extraordinary budget’, because not only will it have a large development budget, but it will also see a record revenue as Sarawak taps into a new major revenue stream.

He also explained that of the total provision for development expenditure of RM9.073 billion, RM8.813 billion will be funded by the state while RM260 million is to be financed by the federal government through reimbursable loans and grants.

“Taking into account an estimated total revenue of RM10.513 billion and a total proposed Ordinary Expenditure of RM10.391 billion, the proposed 2019 Budget is expected to generate a surplus of RM122 million.

“A surplus budget would enable the state to continue building up its financial reserve. This is to ensure its healthy financial position and financial sustainability in the long run,” he said.

In addition to being a development biased and rural focused budget, he noted the proposed state budget will also adopt five other key strategies aimed at generating higher economic growth as well as achieving a more balanced economic development.

These strategies include continuing the state’s socioeconomic development and rural transformation agenda; digital economy as the key pillar of economic transformation; investment driven economic growth; private sector as the main engine of economic growth; and effectiveness of the government’s service delivery system.

Abang Johari also updated the august House on the state’s 2018 financial performance, saying its total revenue is anticipated to surpass the original estimates of RM5.525 billion.

“Based on the revenue collection for the period ended Oct 31, 2018 of RM5.758 billion, the estimated revenue for this year is revised to RM6.966 billion which is RM1.441 billion or 26.1 per cent higher than the original estimates.”

He attributed the expected higher revenue to the increase in dividend of RM1.339 billion or 177 per cent from RM755 million to RM2.094 billion; cash compensation in lieu of oil and gas rights of RM176 million or 11 per cent from RM1.577 billion to RM1.753 billion; 12 per cent service charges for implementing federal projects of RM77 million or 3.8 per cent from RM20 million to RM96.8 million; and mining royalty of RM5 million or 19 per cent from RM27 million to RM32 million.

Nevertheless, he acknowledged that the overall increase in revenue is set off slightly by the decrease in revenue from timber, land and sales tax on lottery.

On the new sources of revenue, he explained this included the five per cent sales tax to be imposed on petroleum products effective Jan 1 next year.

As such, tax revenue has been estimated to be at RM5.268 billion, or 50 per cent of the total expected revenue in 2019.

This comprises RM4.462 billion sales tax — RM3.897 billion from petroleum products, RM445 million generated from crude palm oil or crude palm kernel oil, RM90 million from lotteries and RM30 million from tyres.

It will also comprise RM474 million from forestry, of which RM267 million is expected to be contributed by forest royalty, while RM207 million is from timber premium.

In addition, RM332 million will be from raw material and mining royalties, land rents and others.

As for non- tax revenue, it is estimated to reach RM4.997 billion, or about 48 per cent of the total expected revenue, and will be derived mainly from cash compensation in lieu of oil and gas rights ( RM1.99 billion), dividend income ( RM1.5 billion), interest income ( RM1.006 billion), land premium ( RM250 million), cash compensation in lieu of import and excise duties on petroleum products ( RM120 million) and others, including licences, service fees, permits and rentals ( RM131 million).

Additionally, Non- Revenue Receipt is expected to be at RM9 million, mainly from forest liquidated damages, disposal of assets and forest compounds while Federal Grants and Reimbursements is expected to be at RM239 million.

On Operating Expenditure for 2019, a sum of RM10.391 billion has been proposed which is the state’s own money. Out of this total allocation, RM2.841 billion is for operating expenditure which consists of RM232 million for Charged Expenditure and RM2.609 billion for Recurrent Expenditure.

“A sum of RM7.55 billion is proposed to be appropriated to the Statutory Funds of which RM7.3 billion is for the contribution to Development Fund Account to finance development programmes and projects.

The remaining RM250 million is for appropriation to Contingencies Trust Fund,” he added.

“The proposed allocation of RM2.841 billion for Operating Expenditure next year is an increase of RM212 million, which is about eight per cent over the revised expenditure of RM2.629 billion for this year.”

Out of the RM2.841 billion proposed for Operating Expenditure in 2019, RM798 million or 28 per cent will be for personnel emoluments, RM983 million or 35 per cent for supplies and services, RM909 million or 32 per cent for grants and fixed payments, including operating grants to statutory bodies and local authorities, servicing of public debts and payments of gratuities, pensions and scholarships, RM52 million for the procurement of assets, and RM99 million for other operating expenses.