Chief Minister’s 2020 State Budget Speech

Chief Minister Datuk Patinggi Abang Johari Tun Openg today proposed a sum of RM9.891 billion for the 2020 State Budget, RM2.023 billion lower than the 2019 State Budget of RM11.914 billion.

A sum ofRM6.597 billion will go towards development expenditure and the remaining RM3.294 billion for operating expenditure.

The following are excerpts of Abang Johari’s 2020 State Budget speech presented in the Sarawak Legislative Assembly sitting yesterday.

Datuk Amar Speaker,

To begin with, I would like to update this august House on the latest economic performance for the year 2019 and the outlook for 2020 as a backdrop to the State 2020 Budget proposal.

Global economy

Global growth remains gloomy against the backdrop of intensifying US-China trade war, prolonged Brexit-related uncertainty and rising geopolitical issues which have an impact on energy prices.

As the world economic activity softened, the International Monetary Fund in its October 2019 World Economic Outlook, has projected the world economy to slow-down from 3.6 per cent growth in 2018 to 3 per cent in 2019 before picking up to 3.4 per cent in 2020.

Whilst growth in United States remains firm, activity in other advanced economies, especially in European Union is slowing down, partly due to weakening exports and investment. In the United States, growth is expected at 2.4 per cent in 2019 on the back of robust exports and temporary inventory accumulation. For the year 2020, the US economy is expected to expand at a slower rate of 2.1 per cent as the fiscal stimulus unwinds.

In the Euro region, growth is expected to grow marginally at 1.2 per cent this year and 1.4 per cent in 2020. While domestic demand remains strong, the manufacturing sector is declining.

The emerging and developing economies are expected to grow at 3.9 per cent in 2019 and 4.6 per cent in 2020. China economy is expected to moderate with the negative effects of escalating tariffs and weakening external demand. On the other hand, India’s economy is set to grow largely due to deregulation. Growth in the Asean-5 is expected to stabilise as the domestic demand remains healthy. Growth is expected to be at 4.8 per cent in 2019 and 4.9 per cent in 2020.

National economy

The Malaysian economy has been resilient, grew at 4.7 per cent in the first half of 2019.  Growth was driven by domestic demand, particularly from private expenditure. This is also mainly due to sustained household consumption which expanded by 7.7 per cent. Private investment grew at 1.2 per cent in the first half of 2019. Growth in private investment was mainly in the manufacturing and services sectors.

Meanwhile, public investment contracted by 11.3 per cent on account of lower capital spending by the Federal Government, especially in the first quarter of 2019 and continued weak investment from public corporations. On public consumption, 3.2 per cent growth was registered in the first half of 2019.

Malaysia’s export is expected to moderate in 2019 following the softening external demand for manufactured goods, mainly due to slower global demand for semiconductors.

On the supply side, growth in the services sector is expected to remain strong. Strong household spending will sustain growth in the wholesale and retail trade sub-sector.

Overall, the Malaysia economy is projected to grow at 4.7 per cent in 2019. Going forward, the Malaysia economy is expected to grow at 4.8 per cent in 2020 on the account that the Federal Government will put in place the right measures to optimise the impact on economic growth and jobs creation.

State economy

In the first seven months of 2019, Sarawak economy has experienced a stronger growth.  The performance of external trade has improved, led by stronger export with some moderation in import growth. This positive trend is expected to continue into the rest of the year. For 2019, Sarawak economy is expected to grow between 4.5 to 5 per cent.

The agriculture sector which is largely driven by the crude palm oil has recorded improvement. For the first seven months, the production of crude palm oil had increased by 2.4 per cent, supported by higher yield and better extraction rate. As such, the growth in agriculture sector is expected to rebound to 2.3 per cent in 2019.

Growth in the mining and quarrying sector is also expected to improve to 2.4 per cent in 2019. This is supported by the recovery in natural gas output particularly in the second quarter of the year, after experiencing the pipeline disruptions in 2018.

In the first seven months of 2019, the export of LNG increased by 1.4 million tonnes compared with the corresponding period in 2018. Similarly, the exports of aluminum and ferro alloys have also increased. Therefore, we expect the manufacturing sector will continue to grow at 3.9 per cent in 2019.

The construction sector, driven by higher spending by the State Government on infrastructure projects, is expected to grow strongly at 16.8 per cent in 2019.

The various development projects implemented under the current Eleventh Malaysia Plan and going into Twelfth Malaysia Plan will continue to spur the growth of the construction sector in year 2020 and beyond.

The services sector is also projected to expand by 6.8 per cent in 2019 driven by the growth in the transport and storage sub-sector. There is also an increase in the number of visitor arrivals by 1.1 per cent for the first seven months of 2019 and this is expected to improve in the subsequent months. The incoming of visitors is also expected to generate more economic activities in the State, particularly in the wholesale and retail, accommodation and restaurants sub-sectors.

Demand side

Sarawak total trade grew strongly at 9.7 per cent totalling RM86.1 billion in the first seven months of 2019. Export grew at 12.4 per cent from RM53.6 billion in 2018 to RM60.3 billion, as a result of higher export of crude petroleum and LNG.

Private expenditure is expected to expand further in 2019, with anticipation of higher private investment growth at 5.6 per cent. This will be supported by an improvement in capital spending. Investment on capital goods has also increased by 5.5 per cent in the first seven months of 2019. A total of RM1.3 billion investment in the manufacturing sector was also approved in the first half of 2019.

As for private consumption, it is expected to expand at 3.4 per cent this year supported by stable income and employment growth as well as selected State Government measures such as Bantuan Khas Kewangan which acts as an impetus for an increase in household spending. Public consumption will continue to grow supported by spending on goods and services.

The intensified effort by the State Government to develop more infrastructures throughout Sarawak will contribute to the higher growth in public investment. Huge amount of capital has been invested for the implementation of road network, utilities, and services related projects such as public education and healthcare which would help to further stimulate the growth of the State economy.

Labour market

Our labour market condition remained stable with the total number of 29,113 job vacancies reported in the first six months of 2019. These vacancies were mainly in the construction, manufacturing and agriculture sectors. Overall, we expect the unemployment rate to remain between 3.0 to 3.5 per cent for 2019. In 2020, labour market condition is expected to remain favourable in tandem with the expansion in all economic sectors.

The uncertainties resulting from the escalating trade war between US and China, and other geopolitical development will be a major economic challenge in 2020. The world economic slowdown may somewhat affect our external demand outlook. However, we are optimistic on the State economic performance in 2020 as the state is providing substantial amount of funding for development expenditure that will act as stimulus to cushion the impact of the world economic slowdown. In 2020, the state is projecting a growth of 5.5 to 6.0 per cent.

Financial performance of the state in 2019

Before I present the proposed 2020 Budget, I would like to update this august House on the State financial performance in 2019.

Revenue, 2019

As of September 30 2019, the State has collected revenue of RM5.653 billion, and is expected to collect more revenue towards the end of the year. Presently, Petronas HAS NOT YET PAID the State Sales Tax on petroleum products, while other companies have done so. Under the State Sales Tax Ordinance, 1998, Petronas is LEGALLY OBLIGATED to pay the State Sales Tax and their failure to do so would tantamount to breach of the law.  In this respect, the State has issued Notice of Assessment to Petronas for them to make the necessary payment, failing which, the State would allow the law to take its course.

EXPENDITURES, 2019

Ordinary expenditure

The 2019 ordinary expenditure has been revised upwards from RM10.391 billion to RM10.851 billion, an increase of RM460 million or 4 per cent mainly to cater for advance repayment of Federal loan amounting to RM350 million to finance the implementation of dilapidated schools’ projects in Sarawak.

Up to September 30 2019, an amount of RM8.120 billion of ordinary expenditure or 75 per cent had been expended. Out of the total amount of ordinary expenditure expended during the period, RM2.395 billion was for operating expenditure while the balance of RM5.725 billion was appropriated to the Statutory Funds.

Development expenditure

The estimate for development expenditure for 2019 has been revised upwards from RM9.073 billion to RM9.304 billion, an increase of RM231 million or about 3 per cent.  The revised development expenditure estimate has also been approved by Dewan Undangan Negeri in its sitting in May, 2019. Out of this amount, RM5.036 billion or 54 per cent has been expended for the period ended 30th September 2019. Expenditure is expected to increase as development momentum continues to pick up towards the end of the year.

State Budget proposal for 2020

I would now like to table the 2020 State Budget proposal with the theme “Accelerating Development for the Wellbeing of All Sarawakians.” The 2020 State Budget will provide a total sum of RM9.891 billion of which RM6.597 billion is for Development Expenditure and the remaining RM3.294 billion is for Operating Expenditure.

The 2020 State Budget continues with the following six key strategic thrusts aimed at stimulating the growth of the State economy towards an inclusive, sustainable and equitable development for all spectrums of the society.

 

KEY STRATEGIES OF STATE BUDGET PROPOSAL, 2020

First: Development Biased and Rural Focused Budget

In the 2020 State Budget, a sum of RM6.597 billion is proposed for development expenditure. This represents 67 per cent of the total budget compared to 33 per cent or RM3.294 billion allocated for operating expenditure.

In line with our initiatives to transform the rural areas and ensure that no one will be left behind in this great effort, the 2020 development budget will continue to be rural-biased.  A sum RM4.141 billion or 63 per cent allocation will be provided for the development in the rural areas.

 

Second: Intensifying the State Development Agenda

The State will vigorously continue to pursue its development agenda towards achieving a high-income economy by 2030 using our own mould (membangun mengikut acuan kita sendiri). Considerable allocation will be made for the provision of basic facilities and amenities including roads and bridges, rural water and electricity supplies, as well as other people-centric projects under the Eleventh Malaysia Plan and this will continue under the Twelfth Malaysia Plan.

These development initiatives will open up new and larger areas, unlock the vast economic potentials of the State, and create the critical mass required for greater private sector participation, hence helping to generate more jobs and business opportunities for our people.

 

Third: Digital Economy as the Key Enabler of Economic Transformation 

Digital economy will continue to be the main enabler in our effort to transform Sarawak into a knowledge-based and innovation-driven economy. The Sarawak Digital Economy Initiatives will be intensified further through the creation of a comprehensive digital ecosystem, talent development and entrepreneurship culture.

 

Fourth: Investment-Driven Economic Growth 

The State will also continue to spur its economic development through further broadening of its investment base. These investments will focus on higher value-added activities in the manufacturing and services sectors, as well as resource-based industries such as oil and gas, agriculture, bio-tech, and timber processing industries. On top of the federal investment incentives, the State also offers an attractive incentive package in terms of competitive price of land, competitive electricity tariffs and water rates, low down payment for purchase of industrial land, and provision of facilities to ensure a conducive investment climate.

 

Fifth: Private Sector as the Main Engine of Economic Growth 

Private investment is a key catalyst for economic growth. As such, the State will continue to ensure that the required business infrastructures and business-friendly policies are being put in place to attract and facilitate private sector investment. The completion of major infrastructure projects and public facilities and amenities throughout the State would enable the private sector to play their part as the primary engine of the State economic growth.

 

Sixth: Service Delivery System Enhancement

The State will continue to embark on the implementation of Digital Government to further enhance government service delivery such as providing cashless payment gateway, one-stop online services, and open data system. The State also set out to improve its administrative infrastructure facilities in order to enhance its service delivery to the rakyat.

 

Revenue estimates, 2020

The State is projected to collect revenue of RM10.067 billion for 2020. The 2020 State revenue estimates are summarised as follows:

a. Tax Revenue which is expected to be at RM4.631 billion or 46 per cent of the total expected revenue in 2020, comprising of the following:

(i) RM3.491 billion from State sales tax of which RM2.878 billion from crude oil, liquefied natural gas and other petroleum products; RM445 million from crude palm oil and crude palm kernel oil; RM80 million from lottery, RM58 million from aluminum products while the remaining RM30 million from tyre;

(ii) RM600 million from raw water royalty;

(iii) RM413 million from forestry of which RM229 million is expected from forest royalty while RM184 million from timber premium and tariff; and

(iv) RM127 million from mining royalties, land rents and others.

b. Non-tax revenue which is estimated at RM5.188 billion or about 53 per cent of the total expected revenue. The non-tax revenue is mainly derived from the following major sources:

(i) 839 billion from 5 per cent cash compensation in lieu of oil and gas rights or royalty on oil and gas;

(ii) 784 billion from dividend income;

(iii) 058 billion from interest income;

(iv) RM250 million from land premium;

(v) RM120 million from cash compensation in lieu of import and excise duties on petroleum products; and

(vi) RM137 million from others, including licences, service fees, permits and rentals.

c. Non-Revenue Receipt, which is expected to be RM9 million, mainly from forest liquidated damages, disposal of assets, and forest compounds; and

d. Federal grants and reimbursements are expected to be RM239 million.

 

Revenue re-engineering

The State has made concerted efforts to expand its revenue stream through re-engineering of its revenue base in order to enable the state to maintain its development momentum and keep up with accelerated pace of development especially in the rural areas which require substantial amount of funding. Under the 2020 State Budget, the State has decided:

  • First – to levy State Sales Tax of 1 per cent on aluminum products that are exported out of Sarawak; and
  • Second – to revise the tariff for abstraction of raw water from 1 cent per cubic metre to 2.5 cent per cubic metre. The increase in the tariff rate will only affect the power and water supply providers. I would like to highlight here that the electricity and water charges to the consumers from both the industry and the residential will REMAIN UNCHANGED.

The imposition of State sales tax on aluminum products, and the increase in raw water tariff will be enforced with effect from 1st January 2020.

Ordinary estimates, 2020

A sum of RM9.694 billion is proposed for ordinary expenditure for 2020. Out of this total allocation, RM3.294 billion is for operating expenditure while a sum of RM6.4 billion is proposed to be appropriated to Development Fund Account to finance the various development programmes and projects.

Out of the RM3.294 billion proposed for Operating Expenditure in 2020:

(i) RM837 million or 25 per cent for personnel emoluments;

(ii) 125 billion or 34 per cent for supplies and services;

(iii) 186 billion or 36 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;

(iv) RM79 million for the procurement of assets; and

(v) RM67 million for other operating expenses.

Budget surplus, 2020

With an estimated total revenue of RM10.067 billion and a total proposed ordinary expenditure of RM9.694 billion, the proposed 2020 Budget is expected to generate a surplus of RM373 million. A surplus budget would thus, enable the State to continue building up its well-maintained financial reserves to ensure financial sustainability in the long run.

Development estimates, 2020

Now, I would like to highlight on the proposed development expenditure estimates for 2020. The estimates have taken into consideration amongst others:

(i) Priority, high impact and people-centric projects both in the urban and the rural areas;

(ii) Commitment to complete the implementation of the on-going projects;

(iii) Capacity to implement projects during the year; and

(iv) Funding of federal projects that have been cancelled and/or deferred by the federal government.

For 2020 State Budget, a sum of RM6.597 billion is proposed to finance various programmes and projects under the State Eleventh Malaysia Plan including Rural Transformation Projects (RTP) and various people-centric projects known as Projek Rakyat as well as Program Perumahan Rakyat Miskin Sarawak. This allocation of RM6.597 billion provided for in the 2020 State Budget does not include the allocation for projects funded under State alternative funding.

 

Alternative financing model

In driving our development agenda forward in a more concerted and self-determining manner, we cannot rely on the usual method of funding the development through the annual allocation from both the State and Federal Budgets of which are far from sufficient to support our development agenda especially funding of infrastructure projects in the rural areas. We ought to resort to a more robust and strategic effort in managing our funding initiatives. This calls upon the State to leverage on alternative financing model of tapping into funding provided by Development Bank of Sarawak (DBOS) as well as opportunity in the capital market that offer competitive alternative funding. This is a sustainable platform to adopt in facilitating and providing the state with a much-needed fiscal flexibility in strategising its development agenda as well as managing its cash flow moving forward. Thus, our much long-awaited infrastructure projects and basic amenities can be implemented expeditiously throughout the State and be enjoyed by the rakyat particularly our rural community. This alternative funding coupled with the state’s annual budget shall be the funding initiatives in financing the on-going Eleventh Malaysia Plan projects going into Twelfth Malaysia Plan.

Distribution of Development Expenditure for 2020

The development expenditure 2020 is fairly distributed to ensure a sustainable and inclusive development throughout the state. We will continue to provide sufficient allocation for the implementation of programmes and projects under the various key strategic initiatives as follows:

 

Key strategic initiatives

Strategic Initiative No. 1: Accelerating Development in the Rural Areas

To accelerate the pace of development in the rural areas, a total sum of RM13.357 billion is proposed in 2020 for the implementation of high impact projects such as:

(i) 526 billion for Second Trunk Road;

(ii) 173 billion for Coastal Road;

(iii) 148 billion for projects under Recoda;

(iv) RM500 million for Projek Rakyat;

(v) RM500 million for Rural Transformation Projects (RTP);

(vi) RM343 million for projects under Integrated Regional Samarahan Development Agency (IRSDA); and

(vii) RM236 million for Minor Rural Projects (MRP).

 

Implementation of Projek Rakyat

To date, a total of 408 Projek Rakyat have been approved for implementation. These projects would enable the rakyat, particularly in the rural areas to enjoy better public facilities and infrastructures that would ultimately benefit and improve their standard of living.

Most of these projects are construction of roads and bridges, provision of water and electricity supplies, as well as development of housing and social amenities. The progress of these projects is monitored closely through the State Development Coordination Committee which is chaired by myself.

 

NCR New Initiative Survey Programme and Native Territorial Domain

The state government has always recognised the rights of the natives over their land. In this respect, the state government has embarked on the NCR New Initiative Survey Programme and amended the Sarawak Land Code to recognise the usufructuary right over Native Territorial Domain. Under NCR New Initiative Survey Programme, a total of 52,000 hectares of NCR land throughout Sarawak will be perimeter surveyed and another 15,000 hectares will be surveyed as individual lots.

A sum of RM40 million has been approved by the state government to carry out these initiatives of which RM7 million has been allocated this year while the remaining RM33 million will be allocated next year.

 

Strategic Initiative No. 2: Improving Connectivity and Accessibility

As we are determined to become a high-income economy by year 2030, it is critical that basic infrastructures be put in place to spur economic development and stimulate higher level of economic activities for the advancement of the state.

Various high impact projects with the aim of speeding up people-centric development in the rural areas are presently being vigorously implemented. A sum of RM5.145 billion will be allocated for the implementation of various roads and bridges projects such as:

(i) Coastal Road Network programme including the implementation of major bridges such as Batang Kemena Bridge, Batang Lupar Bridge, Rambungan Bridge, Batang Lassa Bridge and Batang Igan Bridge;

(ii) Second Trunk Road which serve to provide an alternative shorter route to the main trunk road, Pan Borneo Highway and the Coastal Road Network;

(iii) Various roads and bridges projects under Integrated Regional Samarahan Development Agency (Irsda);

(iv) Road construction from Marudi to Mulu via Long Terawan, Miri;

(v) Construction of Ulu Tubai Road to Mentawai/Gunung Buda, Limbang;

(vi) Upgrading of Pakan Road, Sarikei;

(vii) Proposed Nanga Menuan/Nanga Setepus Road, Kapit;

(viii) Proposed Kpg Sebauh Road to Sebauh Hilir Road, Bintulu;

(ix) Construction of Kpg Igan Road to Sg. Ilas longhouse and Kpg. Sah, Kebuaw, Btg. Igan, Mukah; and

(x) Construction of Ijok/Teguyo/Lempaong/Batu Pesok/Rantau Layang Road, Betong.

This extensive road connectivity will serve as a catalyst for further economic development, especially in the rural areas, opening up new areas for agriculture and commercial development as well as other forms of socio-economic activities.

Free school bus service

The State government will introduce a free school bus service next year to provide students within Kuching city with a convenient travelling mode back and forth to school.  The service will be based on the hop-on hop-off concept where the students could hop-on the bus at any point along the route and then hop-off at their respective schools.

This idea is mooted from our recognition of the financial burden faced by the low-income families in urban areas in meeting the cost of transportation to school. Notwithstanding that, this service would also help to ease traffic congestion in the city area. This will be our pilot initiative and will be introduced to other densely populated cities in Sarawak, when the need arises.

Improvement of port development

Ports are essential to support economic activities since they act as a crucial connection between sea and land transport in Sarawak. In meeting the demands of global trading, our ports’ accessibility and infrastructures need to be improved, upgraded and equipped with state-of-art machinery and technology which will enhance its efficiency and effectiveness, making them more attractive as transit and transshipment hubs.

In year 2020, we propose to undertake the following projects:

(i) RM8 million for Investigations, Survey, Hydraulic Study and Preparation of a Master Plan of a Deep-Sea Port at Tanjung Po, Kuching;

(ii) 5 million for Kuching Vessel Traffic Management System to enhance its navigational safety; and

(iii) RM40 million for Installation of Aids to Navigation for Kuala Rajang to enhance the safe navigation of access channel towards Tanjung Manis and Rajang Port.

 

Strategic Initiative No. 3: Expanding Coverage of Treated Water Supply and Electricity Supply throughout Sarawak

In the provision of treated water and electricity supplies, the State government is targeting 100 per cent coverage by year 2025. To achieve this objective, a sum of RM3.742 billion will be provided in 2020 for the implementation of the on-going programmes and projects.  For water supply, we will continue with the implementation of the projects, amongst others:

  • Sarawak Water Supply Grid Programme (Stressed Areas); and
  • Upgrading of treatment plants, reservoirs, water pumps as well as pipes replacement projects such as:
  • Proposed Pipeline from Assyakirin Reservoir to Nyabau Water Treatment Plant Intake, Bintulu;
  • Sumber Bekalan Air Mentah Betong;
  • Dalat Water Supply Phase II, Mukah;
  • Upgrading of Berawan Water Treatment Plant, Limbang;
  • Kpg Panchor Dayak, Serian;
  • Long Lama Water Supply, Miri; and
  • Supply of treated water to schools throughout Sarawak.

As for electricity supply, the Sarawak Rural Electrification Masterplan is being taken up to increase the coverage of 24-hour rural electricity supply from 91 per cent in 2018 to 97 per cent by end of 2020. A sum of RM1.45 billion will be provided for this purpose next year. This project will benefit about 13,000 rural households as well as another 7,000 households in the more remote areas where the connection will be stand-alone off-grid system using renewable energy such as solar.

Despite the challenging geographical terrains, we are committed to ensure that the rural population especially those in the non-feasible area for grid connection to be able to have access to 24-hour electricity. Under the Sarawak Alternative Rural Electrification Scheme or SARES, the rural community is provided with free electricity utilising stand-alone off-grid renewable system. This interim approach benefits about 5,000 remote rural households at 192 villages or longhouses throughout Sarawak.

 

Strategic Initiative No. 4: Spearheading Digital Economy Transformation

The State government under the Sarawak Digital Economy Strategy 2018-2022 has formulated initiatives to achieve its digital development agenda. These initiatives focus on precision agriculture, Industry 4.0, tourism, smart city, e-commerce and digital government. Thus far, the State has provided a sum of RM750 million for this purpose.  For year 2020, sum of RM400 million will be provided to continue with the implementation of various digital economy activities including the following:

(i) Construction of 300 telecommunication towers;

(ii) Smart agriculture;

(iii) Sarawak Integrated Operation Centre (SIOC);

(iv) Smart traffic light;

(v) Digital village initiative and innovation hubs;

(vi) Area based collaborative (ABC) research grant to develop the digital components of economic sectors; and

(vii) Up-skilling and re-skilling of graduates.

Hence, a total of RM1.150 billion is for State Digital Economy Initiatives.

 

Strategic Initiative No. 5: Stimulating Economic Growth

State Industrialisation Programme  

Under the State industrialisation programme, a sum of RM65 million is proposed in 2020 State Budget for the development of industrial estates in various locations, amongst others are:

(i) Sibu Industrial Estate;

(ii) Demak Laut Industrial Park Phase 2B;

(iii) Sematan Industrial Estate;

(iv) Sri Aman Industrial Estate;

(v) Sebuyau Industrial Estate;

(vi) Betong Industrial Estate; and

(vii) Bau Industrial Estate.

 

Entrepreneurship Development Programme

The State government will also aggressively promote domestic investment and encourage entrepreneurship amongst Sarawakians. In this regard, a sum of RM25.0 million will be set aside for the implementation of programmes and projects such as follows:

(i) Small and Medium Enterprises (SMEs) Development Programme;

(ii) Skim Pinjaman Industri Kecil dan Sederhana;

(iii) Projek Anjung Usahawan; and

(iv) Program Peningkatan Usahawan Bumiputera (Putera).

On top of this, we will also introduce a new initiative known as Sarawak Micro Credit Scheme that will provide financial assistance to the entrepreneurs for their business’ expansion and diversification. Under this initiative, a sum of RM30 million will be allocated in this Budget. The target groups of the scheme are:

(i) Sarawakians, both Bumiputera and Non-Bumiputera residing and operating their businesses in the State; and

(ii) B40 group as well as micro or small entrepreneurs who had started their business operations for at least 6 months.

 

SCORE Development Initiatives

Sarawak Corridor of Renewable Energy (SCORE) is a major initiative undertaken by the Sarawak Government to transform the State into a developed state by year 2030, focuses on the development of energy-intensive industries.

For the year 2020, various infrastructures, socio-economic projects and programmes will be implemented under Upper Rajang Development Agency (URDA), Highland Development Agency (HDA) and Northern Region Development Agency (NRDA), which include the construction of roads and bridges, electricity and water supplies, and telecommunication towers. The completion of these projects will benefit in total, more than 330,000 people in URDA, HDA and NRDA regions, as well as stimulate the growth of the local economy, create jobs and business opportunities.

Growing the tourism industry

Tourism plays an important role in driving the growth of service industry. Thus, as part of our efforts in enhancing our tourism attractions and heritage, a sum of RM12.4 million will be provided for next year for the restoration and conservation of five fortresses namely Fort Hose, Marudi; Fort Lily, Betong; Fort Emma, Kanowit; Fort Brooke, Julau; and Fort Sylvia, Kapit.

Our museum plays an important role in creating a cultured and knowledgeable society besides being one of the main tourist attractions in Sarawak. Under this Budget, a sum of RM134.1 million will be allocated to undertake, amongst others, the following projects:

  • Sarawak Museum Campus and Heritage;
  • Santubong Archaeological Park and Wallace Centre;
  • Upgrading of Miri Petroleum Museum; and
  • Brooke Dockyard Maritime Museum.

In addition to this, a sum of RM65.9 million will also be provided for the implementation of various tourism related projects which include the following:

(i) Proposed Performing Arts Centre at Old DUN Building;

(ii) Proposed infrastructure development at Gunung Mulu National Park;

(iii) Proposed beautification of Kuching Waterfront from Kampung Boyan to Fort Margherita;

(iv) Construction of jetty and other facilities at Santubong for Kuching Wetland National Park; and

(v) Upgrading of facilities at Niah National Park.

We will also continue to support international events such as the iconic Rainforest World Music Festival, Asean International Film Festival and Award, Borneo Jazz Festival and Sarawak Regatta. Under this Budget, a sum of RM118 million will be provided to organise various tourism activities including marketing and promotion, bidding for business events as well as tourism fests and events next year.

 

Establishment of Sarawak Trade and Tourism Office Singapore (Statos)

The setting up of Sarawak Trade and Tourism Office Singapore (Statos) is a strategic move by the Sarawak government to explore and penetrate global market in promoting trade and generating more investments as well as attracting more tourists to Sarawak.

Statos, functioning as a one-stop-centre for investment and businesses will become a hub of communication between exporters and importers from Sarawak and business communities in Singapore.  A sum of RM6.1 million will be provided to Statos for its operation and activities under this Budget.

 

Strategic Initiative No. 6: Strengthening Agriculture Development

The State of Sarawak aims to become a net food exporter by year 2030. In line with this objective, government will focus on developing and transforming agri-food sector into a modern and competitive sector through the application of precision farming and smart technologies.

A sum of RM797 million will be allocated to implement various agriculture programmes and projects. Amongst the key programmes and projects that will be implemented include:

(i) Agriculture Facilitation Fund;

(ii) Sarawak Reef Ball project;

(iii) Cash and equipment assistance for fishermen during musim landas;

(iv) Establishment of Agro Park in Sungai Sian and Sungai Baji, Sarikei; and Sadong Jaya, Samarahan;

(v) Collection, Processing and Packaging Centre (CPPC) in Serian, Betong, Lawas, Limbang, Samarahan and Miri;

(vi) Project development for food crops, fishery and livestock;

(vii) Various agriculture irrigation projects under Irsda; and

(viii) Establishment of Pig Farming Areas in Sibu, Samarahan and Bintulu;

 

Raising rural incomes

Agriculture Facilitation Fund (AFF) Programme

In order to boost agricultural productivity and to cushion the negative impact of the weakening in commodity prices, the State Government has introduced the Agriculture Facilitation Fund (AFF) Programme.  This programme will provide facilitation fund as an incentive to rural entrepreneurs, smallholders and farmers for their involvement in agriculture projects.  For this purpose, a sum of RM265 million will be allocated in year 2020.

 

Special assistance for fishermen

As a responsible and caring Government, we have also decided to provide special assistance to the fishermen community during landas. The forms of assistance are as follows:

(i) Cash allowance of RM300 per month per fisherman with a total allocation of RM9.1 million; and

(ii) Equipment assistance with an allocation of RM20 million.

With this assistance, it would help to ease their financial burden during the period of inactivity and to improve their productivity with better equipment.

 

Sarawak reef ball project

Another initiative by the state government to increase the income of the local fishermen is through the implementation of the Sarawak Reef Ball Project. This initiative amongst others, will protect and enhance fishery resources from illegal trawling activities, hence creating new fish aggregating devices (FADs) for local fishermen. This will increase fishery resources that will ensure better catchment for local fishermen.

This year, a sum of RM10 million has been allocated for the project. For the year 2020, a sum of RM60 million will be provided to deploy reef balls along the coastal waters of Sarawak.

 

Establishment of the Sarawak Coastal Guards

In protecting Sarawak coastal areas, marine resources, and Marine Park from external threats and encroachment, the State proposes to set up the Sarawak Coastal Guard to complement the APMM and Marine Police in Sarawak coastline protection duties. A sum of RM90 million will be provided for this purpose.

In this regard, we will also review the Sarawak Fisheries Ordinance, 2003 to strengthen regulatory enforcement in the State riverine and coastal waters.

 

Strategic Initiative No. 7: Enhancing Human Capital Development

Investing in education

The State government is committed to develop and enhance human capital resources to ensure Sarawakians are highly knowledgeable, skillful and creative towards meeting the current and future needs of labour market. This brings me to the critical subject on our investment in education.

Rebuilding and upgrading of dilapidated schools

Under the 2019 Federal Budget, the federal government has allocated RM100 million to rebuild 32 dilapidated schools in Sarawak. We acknowledge this effort of the federal government. But it is sad to mention here that this amount is NOT ENOUGH. Due to the urgent and pressing needs to rebuild and upgrade our dilapidated schools, we have decided to make advance repayment of our public loan of RM1 billion with the Federal Government for this purpose. It is made clear to the federal government that this advance repayment MUST be solely used for rebuilding and upgrading of dilapidated schools in Sarawak.

I wish to inform this august House that out of the advance repayment of RM1 billion, the State has paid the first tranche of RM350 million this year and the balance of RM650 million will be paid in the year 2020.

I am also pleased to inform this august House that the State Government will continue to provide funding for the implementation of the following critical and urgent projects as follows:

  • RM20 million for construction of SMK Maludam, Betong;
  • RM15 million for construction of SMK Ulu Segan, Bintulu; and
  • 5 million for repair and improvement of rural schools throughout the State.

In addition, the following projects would also be implemented in year 2020:

(i) Connecting main electricity grid to 128 schools and treated water supply to 41 schools; and

(ii) Upgrading of 62 schools by Recoda.

 

Establishment of Sarawak international schools and Sarawak Science Centre

In our effort to improve the standard of education of the younger generation and produce quality students, especially from B40 and M40 groups who have the potential to pursue their studies at internationally-merited universities, we have decided to establish our own international schools. These international schools will be located in Kuching, Samarahan, Sibu, Bintulu and Miri. The proposed schools will be run like private schools and incorporate the Cambridge’s International General Certificate of Secondary Education.

In addition, we will also establish the Sarawak Science Centre to complement the formal education system to create awareness and increase literacy among students, youth and public at large on the importance of Science, Technology, English and Mathematic (STEM) education. Fund will be provided for the preliminary works and the construction is targeted to commence under the Twelfth Malaysia Plan.

 

Dual Language Programme (Teaching of Science and Mathematics subjects in English Language) in Sarawak

Another major concern that we have is the declining standard of proficiency in English which is one of the factors that contribute to the large number of unemployed graduates.

The implementation of Dual Language Programme will involve all government primary schools in Sarawak starting with primary one commencing in the year 2020. For this purpose, the State Government had allocated RM11 million in 2019 and another RM35 million in 2020 to carry out the programme.

 

Intensifying technical and vocational education

The State government will also continue to develop highly trained technical and professional workforce to meet market demand including the need of Industry 4.0. In this connection, a sum of RM220 million will be provided for continuation of the following projects amongst others:

(i) Centres of Technical Excellence (CENTEXs) in Dalat, Lawas and Lundu;

(ii) Pusat Pembangunan Kemahiran Sarawak (PPKS) Mukah; and

(iii) Refurbishment of Infrastructure Facilities at Swinburne Sarawak.

Besides these projects, the State Government is also providing funding to encourage active participation in the entrepreneurship and technical programmes. In this regard, the State Government will provide a sum of RM8.0 million in 2020 State Budget for the continuation of the following programmes:

(i) Transformasi Usahawan Desa Sarawak (TUDS);

(ii) Program Inkubator dan Bimbingan Usahawan (PIBU); and

(iii) Program Pembangunan Kontraktor dan Pembekal Bumiputera.

 

Early childhood development

Realising the importance of early childhood development, the State government will continue to provide a grant of RM36 million in 2020 of which RM16 million will be distributed to all kindergartens and nurseries registered with the authorities, while RM20 million is to be allocated to Sedidik.

 

PTPTN loan

It was brought to my attention that some Sarawakian graduates are having difficulties in making repayment of their PTPTN loan while they are those who are not able to secure the loan for various reasons. Being a responsible Government, we empathise with the predicament of these graduates and will work out appropriate mechanism to assist those in need. In this respect, I wish to announce that the State Government will set aside a sum of RM30 million for this purpose next year.

 

Developing talent

Youth and sport development

To achieve our State vision towards the creation of excellent youth and sports, we will provide RM8.3 million to carry out various programmes and initiatives of which RM4 million is for “Sarawak Youth Venture Capital”.

On top of this, we will also provide allocation to implement the following projects in our drive to become a sports powerhouse in Malaysia.

(i) RM9 million for Sarawak Sports Village;

(ii) RM4 million for upgrading and repair of Sports complex, Sarikei;

(iii) RM3 million for Selangau Mini Sports Complex;

(iv) 7 million for repair works of Miri Sports Complex; and

(v) 5 million for Simunjan Sports Complex.

 

Strategic Initiative No. 8: Enhancing Quality of life

Special assistance for post-natal care

When tabling the 2019 State Budget, I had announced RM1,000 incentive for newborn Sarawakians babies, known as Endowment Fund Sarawak effective January 1, 2019.  Today, I wish to announce that a sum of RM18 million will be provided next year as an additional assistance to mothers for post-natal care to ease their financial burden upon giving birth. Each mother will receive RM450 effective from January 1, 2020.

Financial assistance on electricity connection charges

Electricity connection charges, is the charge required to be paid by a customer for the connection of electricity to their premises.

The State government, under its various Projek Rakyat schemes, presently provides free connection of electricity to residents of villages and longhouses via the Additional Late Applicant Funds (ALAF) and Rural Electrification Schemes (RES). However, these schemes do not cover low-income group in the urban areas.

Hence, in our efforts to ease the financial burden of this group, I am pleased to announce that the State Government will provide financial assistance to them as follows:

(i) For connection charges up to RM5,000, it will be free to the applicant as the cost will be fully borne by the State Government; and

(ii) For connection charges above RM5,000 to RM10,000, the State government will subsidise 70 per cent of the cost and the balance of 30 per cent will be borne by the applicant.

In this connection, a sum of RM8 million will be provided next year for this purpose.

Free water programme

I am pleased to announce that the state government will introduce a free water programme next year. Under this programme, every household from both the urban and rural areas will enjoy free water for the first RM5.00 of their monthly water bill. This programme will help to reduce the financial burden of the rakyat. This will involve an allocation of RM40 million and will benefit an estimated of 600,000 households’ accounts throughout the State. This programme will be effective from 1st January 2020.

 

Providing affordable houses

We are committed to provide quality and affordable housing to the rakyat especially for the low-income group (B40). We will allocate RM90 million to Housing Development Corporation (HDC) to implement this initiative in year 2020, where the price of houses is set at below RM300,000 per unit.

To address the end-financing problem faced by the house buyers, we have set up Mutiara Mortgage and Credit Sdn. Bhd., to provide loans to the low-income group (B40) to purchase houses developed by HDC. As of to date, RM37 million has been disbursed to 879 applicants. An additional sum of RM100 million is proposed to be set aside for Mutiara Mortgage & Credit Sdn. Bhd. for the purpose.

The State government will also provide RM90 million for minor house repair known as Program Pembaikan Rumah Rakyat Miskin Sarawak (MRP-PPRMS) for B40 group.

 

Kampung Resettlement Scheme and Kampung Extension Scheme 

Since the implementation of the Kampung Resettlement and Kampung Extension Schemes, a total of 36,978 or 77 per cent out of 48,013 residential lots, had been allocated to the eligible applicants. Under the Eleventh Malaysia Plan, 44 new projects with an approved allocation of RM359.9 million will be completed to provide 4,434 new residential lots.

Under the 2020 State Budget, a sum of RM78 million will be allocated to continue with the implementation of both Schemes in Kuching, Sri Aman, Sibu, Sarikei, Samarahan, Serian, Mukah and Betong.

 

Urban redevelopment

The State will provide a sum of RM467 million for the continuation of various urban redevelopment and renewal projects. These projects aim to provide the urban dwellers with better facilities, greater job opportunities and affordable housing that will mitigate urban related issues and address overcrowded settlements. Amongst the projects are:

(i) Darul Hana Redevelopment;

(ii) Sungai Bedaun Project, Kuching;

(iii) Kampung Tabuan Melayu Redevelopment;

(iv) Kampung Sejingkat Redevelopment;

(v) Kampung Datu Sibu Redevelopment;

(vi) Kampung Baru Kapit Redevelopment;

(vii) Kampung Datu Redevelopment, Kuala Lawas; and

(viii) Kampung Kemuyang Infrastructure Works, Sibu.

 

Strategic Initiative No. 9: Improving government service delivery

The State government is presently undergoing a transformation towards achieving a world class public service. Hence, to further enhance its service delivery system, the State government will provide RM52 million under the 2020 State Budget to undertake various e-government initiatives.

The State government will also provide fund for the construction and renovation of government offices and quarters next year, of which RM307 million is for the following projects:

(i) Integrated Administration Centre Limbang;

(ii) Lawas Administrative Office Complex;

(iii) Tanjung Manis Halal Hub Administrative Centre;

(iv) Wisma Residen at Jepak Bintulu; and

(v) District Offices in Mukah, Kapit, Serian, Sibu, Bintulu and Miri.

 

Strengthening the Administration of Jawatankuasa Kemajuan dan Keselamatan Kampung (JKKK)

We recognise the important role and significant contribution of JKKK, as a grassroots machinery in helping to ensure the safety and prosperity of our villages. This

has, to a large extent contributed to the harmony and unity amongst our multi-racial community. Moreover, with the accelerated pace of development in the State, the role of JKKK is becoming more challenging and critical. This calls for the need to strengthen the administration of the JKKK in order for them to be more well-informed, knowledgeable and proactive. Thus, the State will provide a sum of RM100 million in 2020 for JKKK to run their activities as well as for payment of meeting allowance and monthly allowance to the chairman and the secretary of JKKK.

 

Exploration rights to Petros

Now, I would like to touch on the State participation in oil and gas sector. Oil exploration activities started on land in Miri in 1810 and moved offshore onto to the Continental Shelf of Sarawak in the 1950s.

It is the State government’s intention to manage the remaining hydrocarbon potential in the onshore areas of Sarawak. Therefore, in exercising the State’s rights to regulate oil mining within Sarawak under our Oil Mining Ordinance 1958 (OMO 1958), the State has decided to award licences for oil and gas prospecting and production in the onshore areas to Petros.

Petros will evaluate all applicants for licences or mining leases and will be empowered by the State Government to facilitate all the oil and gas prospecting and mining activities.  Initially, the onshore mining licenses to be issued to Petros will cover the Limbang and Baram areas.

The efforts of the State government to gain fairer and more equitable share of revenues from oil and gas produced in Sarawak will continue to be one of the main agenda of the GPS government.

 

Federal funding  

As announced in the federal 2020 Budget, the federal government had approved an allocation of RM4.4 billion out of RM56 billion for development budget to Sarawak. This amount represents only 7.8 per cent of the total federal development budget next year; and not 30 per cent as perceived by some people.

Therefore, we call upon the federal government to fulfill its promise to allocate 30 per cent of the total development budget to Sarawak. The mere allocation of only 7.8 per cent is considered unjustified and very much skewed towards Peninsular Malaysia. Do not forget that Sarawak has contributed significantly to the national economic growth as well as to the Federal government coffer in terms of collection of taxes and revenue from oil and gas over the past 50 years.

 

Financial prudence

As we are all aware, the State’s financial account has earned clean bill of health for many years. This is a testimony of the State’s continuous sound financial management in exercising financial prudence and financial discipline at all levels. However, we must not rest on our laurels. With that, I urge all controlling officers of the various ministries, agencies, statutory bodies and local authorities to continue adopting and exercising good practices and good governance, upholding principle of discipline and responsible financial management. At the same time, internal control system and risk management

framework must be strengthened to avoid leakages, mismanagement, and poor investment decision.

Given the need to create greater accountability, transparency and efficiency, we will also continue to enhance our procurement processes through the implementation of e-Procurement, formulation of updated, transparent and comprehensive procurement guidelines, and empowerment of key officers.

 

Preparation for the Twelfth Malaysia Plan

Now let me touch briefly on the preparation for the State’s Twelfth Malaysia Plan.

The Eleventh Malaysia Plan is coming to the end in 2020. Preparations are now being made for the formulation of the State Twelfth Malaysia Plan, which will cover the period of 2021 to 2025.

The Twelfth Malaysia Plan will focus on enhancing inclusive development and wellbeing of the rakyat, pursuing balanced development between urban and rural areas, accelerating human capital development, and improving public service delivery. Priority will be given to the following key focus areas:

(i) Modernisation of agriculture;

(ii) Strengthening infrastructure;

(iii) Advancing tourism; and

(iv) Accelerating human capital development.

Our overall development efforts will help to create a favourable business eco-system that is a conducive business environment in Sarawak that will attract investments and growth of value-added industries especially in the manufacturing sector.

These key focus areas are critical to spearhead the transition towards achieving a high income and developed State by 2030.

 

Conclusion

In a nutshell, this Budget is a clear testimony of the GPS government’s commitment to develop Sarawak and transform its economy which ultimately will uplift the standard of living and enhance the wellbeing of the rakyat. The budget assures that all levels of our society will benefit from the fruits of development; touching their lives, hearts and minds.  Whether they are urban and rural folks, teachers and students, mothers and their newborn babies, farmers and fishermen as well as entrepreneurs and business community at large, all of them will feel the positive effects of the 2020 State Budget.

We will also be resolute in our stand and struggle to secure a much better and fairer deal for Sarawak within the MA63 framework and constitutional provisions. Therefore, I urge all Sarawakians who love this beautiful land of ours to give full support to the GPS government in these ongoing endeavours and efforts.

As long as we Sarawakians remain united, not only in spirit but also in purpose, having the pioneering and can-do attitude, God willing, we will persevere and prosper. Rest assured, the Sarawak government under GPS will continue to give our utmost priority and attention to the welfare and well-being of our rakyat in tandem with our ‘Sarawak First’ credo, despite the strenuous effort of certain quarters to divide and rule and sow hatred among us. I believe we shall prevail if we continue to imbue within ourselves the much-cherished values of mutual respect, tolerance, and understanding, as we strive to make this beloved State of ours a better place for all.

 

Datuk Amar Speaker, I propose that the Bill be read a second time.

 

Thank you.