Collaboration continues with agencies to enhance revenue – Masidi
KOTA KINABALU (April 24): The Sabah State Government will always collaborate with various agencies to enhance its revenue. Finance Minister Datuk Seri Panglima Masidi Manjun said several initiatives will be implemented towards that end.
He said that his ministry will streamline the process of exploring new revenue sources implemented by other ministries/departments/agencies such as Carbon Credits, Conservation Fees, and others.
He added that his ministry will also continuously explore and study the implementation of new taxes to expand the product and scope of the State Sales Tax.
“For your information, there are currently eight taxed products, two of which were introduced recently on April 1, 2024, namely silica sand/silica and palm biomass exported from the state of Sabah, with an estimated State Sales Tax collection of RM12 million annually,” he said.
The State Government will review and improve the contract agreements/ordinances regarding the royalty rates imposed, he said.
“As mentioned earlier, concerning the five percent gold royalty, it is proposed to be increased to 10 percent and applied when the gold is smelted rather than when sold. If implemented, the gold royalty rate will double. Additionally, the State Sales Tax will also be imposed on gold exported from Sabah,” he said.
Masidi said that his ministry will also improve the management and operations of State-owned enterprises and statutory bodies to increase profits and subsequently enable higher dividends and contributions to the State Government.
At the same time, the State Government will review the service/license fee rates to align with the improvement of service delivery quality to the people, he said.
“Furthermore, the State Government will continue negotiations with the Federal Government regarding special allocations under Part IV, Tenth Schedule, Federal Constitution, and other entitlements claimed by Sabah,” he said.
Masidi also called upon all enforcement officers in the State Government ministries/departments to ensure the implementation of Ministry of Finance Circular No. 1/2022 to enhance the management of Sabah state revenue collection and introduce more efficient revenue collection operations while ensuring revenue leakage is addressed.
Meanwhile, Sabah Development Bank (SDBank) is aggressively working to restructure and recover its non-performing debts, he said.
“The acquisition of Sabah International Petroleum Sdn Bhd (SIP) by SMJ Energy Sdn Bhd (SMJE), among other initiatives, has helped reduce SDBank’s burden of non-performing debts while injecting fresh capital,” he said.
“Prior to this acquisition, SIP had ventured into several businesses in the oil and gas sector that experienced losses. They also had very high loans and were burdened with high-interest rates, which affected their profitability and financial sustainability,” said Masidi when winding up the Finance Ministry’s speech at the State Assembly on Wednesday.
In this regard, the issuance of the RM900 million Sukuk for the purpose of acquiring SIP represents a value accretive acquisition, given the significant dividend-generating capacity from the 10 percent equity stake in SIP in LNG9 Sdn Bhd, he said.
SMJE has also undertaken the restructuring of SIP by focusing on more profitable businesses, along with refinancing SIP’s loans, allowing SMJE to use a much lower interest rate than the market rate to repay SIP’s debts, which had very high interest rates, he said.
“Since SMJE took over SIP in October 2023, SIP has been able to declare dividends to SMJE, allowing SMJE to achieve its targeted profits. Additionally, SMJE has also obtained returns from other transactions that have yielded a profit after tax amounting to RM217 million, enabling it to provide dividends to the State Government amounting to RM50 million in 2023,” he said.
Masidi also informed that any issuance of Sukuk cannot be used for dividend payments to the State Government as it contradicts the terms and conditions of the Sukuk Wakalah Programme.
“Sabah continues to benefit from its involvement in the oil and gas sector through the Commercial Collaboration Agreement (CCA) signed with Petronas on December 7, 2021. Under the CCA, SMJE acts as a Responsible Financial Investor focusing on generating oil and gas assets across the upstream, LNG and downstream/petrochemical sectors with healthy cash flows and managed by leading operators with proven Environmental, Social and Governance (ESG) performance records,” he added.
He also said that on April 5, 2023, SMJE completed the acquisition of a 50% stake in the Samarang Production Sharing Contract (PSC) by signing a Farm Out Agreement.
The completion of the acquisition since May 31, 2023, enabled Sabah to sell its crude oil rights at the Labuan Crude Oil Terminal (LCOT) to international crude oil buyers for a total of four cargoes so far, with an estimated accumulated sales revenue of just under RM580 million to date.
On June 6, 2023, SMJE acquired a registered 25% stake in the Sabah Ammonia Urea Petrochemical Plant (SAMUR) in Sipitang.
“Since the acquisition, SMJE has received a net income of RM53 million from SAMUR for the Financial Year 2023,” he said.
“On October 25, 2023, SMJE acquired a 10% equity interest in Petronas LNG9 (PLNG9) through the acquisition of Sabah International Petroleum (SIP). Sabah received a cash payment of RM343 million from PLNG9 in 2023 alone. Additionally, SMJE received an additional RM112 million in dividends from PLNG9 since the beginning of the year and expects healthy dividends in the coming years. SMJE continues to pursue several profitable upstream, LNG and downstream/petrochemical opportunities with the full support of the Sabah State Government,” he said.
-Agency
