RM4.16 bln surplus Sabah State Budget

Datuk Seri Mohd Shafie Apdal

KOTA KINABALU: The Warisan-led Sabah government yesterday presented a surplus State Budget of RM4.16 billion for the year 2019, which is slightly more than this year’s RM4.104 billion budget.

This is the fifth consecutive year that Sabah has a surplus budget.

Chief Minister Datuk Seri Panglima Shafie Apdal, who is also state Finance Minister, said when tabling the 2019 State Budget at the State Assembly that the expected revenue for next year is RM4.27 billion.

Shafie said the State Budget 2019 which carries the theme “Driving Growth for the People” that the surplus involved an increase of RM40.43 million or equivalent to 62.31 percent compared to 2018.

“This is the highest surplus in the last five years,” he said.

He added that the estimated revenue for 2019 had been classified into three main categories, namely Tax Revenue, Non-Tax Revenue and Non-Revenue Receipts.

He said of the RM4,265 million revenue collection, RM1,125.6 million or 26.4 percent would be Tax Revenue; RM2,735.9 million or 64.1 percent in Non-Tax Revenue; and RM403.5 million or 9.5 per cent in Non-Revenue Receipts.

Shafie also said petroleum royalty was expected to remain the highest contributor to 2019 total revenue estimates which would account for 37.5 percent with a projected collection of RM1,600 million.

“This is based on the payments received by the Sabah government in 2018 amounting to RM1,606.6 million and is the highest amount of petroleum royalty ever received in the history of Sabah. This amount also exceeds 2018 estimates of RM1,318 million subsequent to the increase in price and production of petroleum,” he explained.

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The second highest contributor to the state revenue is the State Sales Tax on Crude Palm Oil (CPO) which leads in the Tax Revenue category.

“It is expected that the price of CPO can reach RM2,400 per metric tonne with production of more than five million tonnes in year 2019.

Therefore, the Sabah government has projected a collection RM900 million from this source.

Shafie later explained that to achieve the aim, the state government would not be relying on raw source but rather on downstream efforts.

“If we can enhance the capacity in going downstream, we will be able to realise this,” he said.

He also said the revenue estimates for next year on State Sales Tax on lottery tickets were expected to remain the same as the 2018 estimates of RM60 million.

Shafie also stated later in a press conference that the government would commence the collection of sales tax on fishery commodities brought out from Sabah at a rate of five per cent beginning next year.

The revenue collection from this sales tax is estimated at RM20 million.

While tabling the budget, Shafie explained that the State Sales Tax (Tax Rate) Order 2014, which allowed the Sabah government to impose tax on fishery commodities brought out from Sabah had already been gazetted before but the tax collection was never started.

The commencement of the collection of sales tax is due to the high number of complaints on insufficient high quality fish supply for local consumption, he said.

“This tax should not burden the people because it is not imposed on local consumption. It should be able to promote Sabah as fresh and quality seafood haven at a reasonable price in this region,” he said.

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Meanwhile, the Non-Revenue Receipts category consists of Federal Government Receipts and Contribution which is estimated at RM403.2 million or 9.4 percent of the total State Revenue Estimates in 2019, he said.

Examples of receipts in the category are Capitation Grant and Grant to Fund Operating Expenses for Departments under Concurrent List, he said.

He said contributions under the category were only part of the financial funding provided by the federal government to Sabah.

Shafie also said the Sabah Ports and Harbour Department was expected to contribute RM45.4 million to the state revenue; whilst the Forestry Department is expected to contribute RM149.5 million or 3.5 percent of the total state revenue for the year 2019.

He said the contribution from the Forestry Department was slightly lower than last year’s estimates and that the attributing factor to the decline was the ban on timber exports by the Sabah government starting from May 23, 2018.

Returns on agro-forestry royalty are also expected to decline as a result of lower prices on oil palm and rubber, he said.

At the same time, he also called on all revenue collectors, namely the Lands and Surveys Department and Sabah Water Department, to increase their efforts in revenue collection including measures to reduce the arrears.

He stated that the Sabah Water Department had managed to collect RM66.8 million in revenue between August and the end of October, this year, following the revamp and restructure of the department.

He added that the department was expected to collect revenue of RM330.2 million next year, which would contribute 7.7 percent to the total estimated revenue of the year.

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“The increase in revenue collection will facilitate the government to provide a higher allocation to fund programmes to improve quality, coverage and treated water supply to the rural areas which is still inadequate,” he said.

Meanwhile, the estimated revenue estimates for Lands and Surveys Department next year is RM285 million.

The Wildlife Department and the Veterinary Services Department are expected to collect RM20.8 million and RM4 million, respectively in 2019.

The interest and investment returns are expected to decline with an estimate of RM369.5 million for 2019 as compared to RM453 million in 2018.

He said the Interest and Investment Returns were expected to decline with an estimate of RM369.5 million for 2019 as compared to RM453 million in 2018.

“This decline is due to lower dividends received from statutory bodies and government agencies as well as lower tax refunds from Inland Revenue Board.

Contribution from this category represents 8.6 per cent of the total state revenue estimates in 2019.