IT was Putrajaya that abolished the import duties and excise on petroleum products in 2000 to take part in the Asean Free Trade Agreement (Afta), the Sabah state assembly was told today.

As compensation for Sabah’s loss of revenue, the state was paid in various amounts from 2001 but the payment ended in 2005, Sabah chief minister and Finance Minister Shafie Apdal said.

“But for the continuous efforts done by the Finance Ministry, Sabah received a fixed payment of RM120 million annually from the federal government,” he said while winding up for the Finance Ministry at the state assembly today.

Shafie said the state’s right to demand 40% of the revenue collected by the federal government had become difficult as a result of the abolishment of the excise and duty on petroleum products 18 years ago.

“Today, the same problem is faced as the new government is trying to fix the rate for the oil royalty and petroleum export duty, as both components correlate with each other,” he said.

Export duty on minerals including petroleum is a state right and comes under Part V Schedule 10 of the federal constitution, which covers the state oil royalty entitlement.

Shafie had raised the issue following Sabah acting opposition chief Jeffrey Kitingan’s speculation on the amount of state revenue in his bid to table the opposition’s alternative budget on Monday.

Shafie had lambasted the Tambunan assemblyman for coming up with unrealistic speculation on the revenue entitlement, saying Jeffrey’s attempt to spend beyond the state financial abilities could be detrimental to the state economy.

However, Shafie said the new government will fight for the state’s rights and will never stop raising the matter to the federal government and the special federal cabinet committee formed to study the Malaysia Agreement 1963.

Putrajaya has formed three committees to look into the MA63 issue, namely the steering committee, the Sabah team of which Shafie is leading; the technical committee and the working committee.

Saying that the federal government needs time to go through all the details of MA63, Shafie noted that he had instructed the state Finance Ministry and Attorney-General’s Chambers in the meantime to find other options within the law to collect more revenue from crude oil and gas, such as imposing a tax or charging on the two resources.

Sarawak, for example, will be imposing a 5% sales tax on petroleum products next year. – November 14, 2018.