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Economist says high state revenue will strengthen financial position

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Dr Jerome Kueh Swee Hui

KUCHING: Sarawak’s outstanding revenue of RM11.9 billion for the financial year 2022 which surpassed the projected revenue of RM10.2 billion by 17 per cent is a testament to the state’s growth and will have a positive impact on the economy.

Universiti Malaysia Sarawak (Unimas) economist Dr Jerome Kueh said the higher revenue will help ease the budget and strengthen the state’s financial position.

He said the revenue can be used to fund infrastructure-related development projects and enable implementation of more people-centric initiatives.

“These initiatives are essential to safeguard the welfare of the people and reduce their burden in view of the higher prices of goods and services due to inflationary pressure,” he told New Sarawak Tribune.

From the business standpoint, he said, higher revenue will indirectly boost confidence among investors which will provide a positive perception among the investors of the state’s strong financial position.

“Eventually, investors will not hesitate to continue and even expand their business activities here,” he said.

Describing the achievement as remarkable in light of the challenging environment, particularly post-Covid-19 pandemic, he said there is a need to diversify the source of revenue or taxable products under the State Sales Tax (SST).

Jerome said this is to ensure consistent and sustainable revenue generation via taxes instead of relying on selected taxable products.

“The main source of SST taxable products are oil and gas products, palm oil products and aluminium where higher market prices for oil and gas products as well as palm oil products generated higher SST collection in 2022.

“The state can capitalise from the increased market price of these products but this indirectly also indicates the dependency on external factors such as the market price of the commodities,” he said.

He explained that under circumstances where the market price of the commodities surges, it can be beneficial in terms of income generation via SST on oil and gas, including palm oil products.

However, this may become detrimental when the market price of the commodities decline and may affect collections of SST on those products.

“There are always opportunities and threats when looking at the demand and supply aspects at the global level,” he added.

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