DEALING WITH REVENUE SHORTFALL
Taking priority now are economic matters, particularly over the management of oil and gas resources.
Sarawak insists that oil and gas resources in its territory must be regulated under a colonial-era Oil Mining Ordinance 1958, which stipulates that oil and gas resources found within 200 nautical miles of its waters belong to the state.
The state government led by chief minister Abang Johari Openg wants the six new oil and gas fields discovered in the Balingian province of the continental shelf and the West Luconia area to be developed jointly with Petronas to ensure that the state receives more than the annual 5 per cent royalties that it currently enjoys. Neighbouring Sabah is also subject to the same conditions and the state government is demanding higher annual payments.
Their demands are not without merit. According to the federal government, Sarawak’s probable and proven reserves of petroleum represent 60.87 per cent of Malaysia’s total reserves, while Sabah’s make up around 18.8 per cent.
In 2022 alone, the federal government received more than RM50 billion (US$10.7 billion) in dividends from Petronas, which effectively means that the Borneo bloc has been propping up Kuala Lumpur financially for decades. Demands for a higher share of revenue under new profit-sharing arrangements for oil and gas extracted from the two states means Kuala Lumpur would have to find new sources of revenue to meet the shortfall.
It is a dilemma Mr Anwar must quickly resolve to preserve Malaysia’s newfound political stability.
Leslie Lopez is a senior correspondent at CNA Digital who reports on political and economic affairs in the region.
Source: CNA
