Sarawak’s Budget 2018, like in the previous years, emphasizes on the need to accelerate the development agenda for the year to raise the living standard of the rakyat and push the State not only to attain the status of a developed State but the richest State in the country by the year 2030. It takes cognizance of the various challenges and risks and the anticipated impacts of digitalization on the economy that the people have to face from both the domestic and external fronts.
Obviously, the key strategies of Budget 2018, which was approved during the last sitting of the last sitting of the State Legislative Assembly, are: the Budget continues to be development-biased with 70% of the allocation for development purposes while 30% for operating expenditure.
The State, with the strategy, should be able to spur a desirable level of economic activities and growth in line with the continuous aspiration to narrow the development gap between urban and rural areas. The Budget gives priority to rural development with 53% of the allocation for projects and programs earmarked for rural areas. It allocates RM 1billion to support the State’s vision to maximize the potential of digital technology and digitalization and makes digital economy the key pillar of economic transformation.
The Budget cont inues t o provide allocation for the State Transformation Initiatives covering the following three key areas namely Socio-Economic Transformation; Rural Trans format ion; and Performance and Service Delivery Transformation. Budget 2018 allocates substantial share of allocation for strategic investments and projects Through initiatives like setting up of Development Bank of Sarawak (DBOS) and Petroleum Sarawak Berhad (PETROS); implementation of LRT and Methanol Plant; building more telecommunication towers and Implementation of infrastructure and renewable energy projects. 2018 Budget continues to facilitate private sector as the main engine of growth by providing conducive and friendly business environment and to foster closer and deeper public-private collaboration and partnership.
In this context, the Stat e Government will continue to set up more industrial eStates and innovation centers; Improve and provide additional public facilities and infrastructures such as roads and bridges, water, electricity, telecommunication and ports.
Besides, it offer generous incentive in terms of competitive price of land, affordable down payment for the purchase of industrial land, competitive rates for electricity and water as and other supporting facilities to entire start-up and ensure cost of doing business is attractive. The incentives complement the various incentives already put in place by the Federal Government for the manufacturing and its related services; Establish training institutions and incubation centers to step up human capital development and capacity building with priority in technical training and vocational education and provide efficient e-Government service delivery.
The Budget puts continued emphasis on collective efforts in enhancing financial management and the efficiency of delivery system. The State ought to be prudent in managing operating expenditure, ensuring optimization on the utilization of resources, increasing productivity and more importantly minimizing wastage.
The Second Minister of Finance, Dato Seri Wong Soon Koh, in his winding speech during the debate on Budget 2018 in the last sitting of the State Legislative Assembly, said Sarawak, in pursuit of development and transformation agenda, provides substantial allocation for development even in the face of anticipated declining trend in the revenue. He said the lower State revenue, which is anticipated to register a deficit of RM256 million, will be attributed to the continued weaker global commodities process particularly crude oil and gas as well as reducing receipts from forestry and dividend income. However, the State will step up measures to sources for new revenue streams so as to reduce its dependency on oil and gas as the major contributor to the State revenue.
The Budget 2018 consists of Ordinary Budget and Development Budget. The Ordinary expenditure amounts to RM5.781 billion. Of this amount, RM2.481 billion is for operating expenditure and the balance of RM3.3 billion will be appropriated to Development Fund Account to finance development expenditure,.
A supply Bill was tabled to utilize fund of RM5.564 billion from the Consolidated Revenue Account for the service of 2018. This is in line with the State Constitution, Financial procedure Act, Treasury Instruction and Standing Order 65. The Development expenditure amounting to RM5.745 billion is provided under Development Fund Account to finance various development programs and projects.
The Budget is presented in accordance with State Constitution, Development Fund Act and Standing Order 64. The Ordinary Budget is a separate Budget from Development Budget. He believed the GDP growth ranging from 4.0 percent to 4.5 percent forecasted for next year is achievable in line with the broad based growth across the industries and the higher external demand. Dato Seri Wong Soon Koh said a total of 1,140 projects and programs with a ceiling of RM20.0 billion have been approved for implementation.
Of these, 1,140 projects, 702 are physical projects while 438 are in the form of programs and investments Under the Eleventh Malaysia Plan. As at the end of last September, 71 projects or 10.1 percent has been completed while the remaining 631 projects or 89.9 percent are in various stages of implementation. The cumulative expenditure from 2016 up to 30th September 2017 was RM5.36 billion or 26.8 percent against the RM20 billion ceiling of the Eleventh Malaysia Plan. A total of 578 Federal Funded Projects have been approved for implementation in Sarawak under the Second Rolling Plan (RP2) of the Eleventh Malaysia Plan.
As at the end of last September, 72 projects or 12.5 percent of the total projects have been completed. The remaining 506 projects or 87.5 percent are in various stages of implementation. The cumulative expenditure for Federal funded projects was RM2.36 billion or 50.9 percent of the allocation of RM4.64 billion approved under the Second Rolling Plan. Currently, a total of 1,718 State and Federal funded projects are being implemented in Sarawak by various Ministries, Departments and Agencies. The programs and projects must be implemented and completed on a timely manner and within the Budget, without compromising on quality and safety standard.
The delivery excellence of the Government programs and projects hinges on the effectiveness and efficiency on project planning, execution, monitoring and coordination by all stakeholders. Obviously, the implementing agencies are undertaking continuous efforts to streamline project management and execution in order to achieve delivery excellence to benefit the Rakyat.
Dato Seri Wong Soon Koh believes the digital revolution forces will reshape the global economic outlook, reform entire production and supply chains and disrupt the classic business models with the emergence of new market players supported by openness and connectedness. He said digital economy, as the prime mover of economic transformation, will further accelerate growth powered by knowledge, innovation, digital technology and data analytics.
This strategy will not only steer Sarawak into the next stage of economic development but more importantly prepare the State to tap opportunities going into the future. In this context, Budget 2018 allocates about RM1 billion for Sarawak Digital Economy initiatives to accelerate growth, reduce socio-economic divide, generate employment and business opportunities through e-commerce, harness talent and create value through innovations and entrepreneurships and achieve e-government for efficiency, transparency, trust and confidence. Dato Seri Wong Soon Koh said the State, being an open economy is susceptible to the global and regional economic vitalities.
Hence, it is vital for Sarawak to accelerate development through further broadening investment that will create sustainable long- term economic growth. He said the establishment of DBOS and PETROS are amongst the strategic investments and initiatives being undertaken to expedite the development and harness the vast potential of resources in order to further boost domestic economy in the long- term. DBOS, the first development bank being in Sarawak, is the centre piece of the new financial model to support the development agenda of the State.
Its key role is to provide the necessary financing for the implementation of strategic projects and investments that would yield returns to the State in the longer term. The setting up of PETROS is to enable the State to participate in the oil and gas industry. The State Government, in the effort to attain the status of high-income economy for Sarawak in the year 2030, would leverage on research and development activities with the view of sourcing for new revenue for the State.
The State must exercise fiscal and budgetary flexibility to maintain healthy level of reserves and ensure financial sustainability and autonomy so that it can further push development momentum amidst economic uncertainties. Dato Seri Wong Soon Koh said the State Government will maintain budgetary policy guidelines of development-biased budget and embark on digital economy as the key thrust of future economy.
This is to maximize the potential of digital technology and digitalization to leapfrog the State economy and create more opportunities and higher value to sustain the healthy financial position. He said the state Government will also continue to inculcate a culture of prudent financial management and strong financial discipline in managing financial resources particularly on expenditure for operating purposes.
At the same time conscientious efforts must be made to instill transparency, accountability and integrity in the work culture; Besides, efforts must also be made to further strengthen the capability and competency of finance workforce through knowledge enhancement and continuous training; Utilize DBOS as an alternative mode of financing for strategic projects and investments. Dato Seri Wong Soon Koh said Sarawak State has again been accorded with a “clean certificate” for its Financial Accounts for 2016.
This is a testimony good governance practices reflecting the management of financial affairs being conducted in a transparent, responsible and accountable manner. In addition, international rating houses, Moody’s and Standard & Poor’s have maintained the State commendable credit ratings of A3 and A-, respectively.
These assigned ratings reflect a sustained record of sound financial management and performance, underpinned by strong reserves and prudent budgetary practices. The achievements, as highlighted, are the results of continuous good governance practices and a disciplined culture inculcated in the State financial management over the years. In this regards, the statutory bodies and GLCs are urged to shape-up and drive themselves as true business and private sector with a stronger commercial approach. This is of paramount importance for them to become financially self-sustaining and shall not be dependent on State financial support. They must continue to contribute to the State development agenda.
In this regards, the civil service, must steadfastly uphold the value of good governance, transparency, accountability and integrity in the public service work culture.
These are vital attributes to gain the trust and confidence of the rakyat as well as meeting their expectations of the government delivery system. Dato Seri Wong Soon Koh said the trust and confidence of the Rakyat, close collaboration with the Federal government and private Sarawak to embark successfully on digital journey towards achieving “Smart-Sarawak” or “s- Sarawak”, without compromising on cyber security and the protection of personal data. In this connection, the State Government will complement efforts of the Federal Government to improve the well-being and quality of life of the Rakyat.
It would continue to implement programs and projects to enhance the wellbeing of the Rakyat so that they could enjoy the benefits of development progress and advancement. He assured there will be ongoing implementation of programs and projects for water and electricity supply, upgrading of infrastructure in rural areas as well as improving accessibility to the remote areas of the State. Besides, the State will embark on the implementation of initiatives under the digital economy so as to seek and secure new opportunities that could bring greater innovations and create values and prosperity to all Sarawakians.
Dato Seri Wong Soon Koh said Sarawak State would continue to seek for more financial allocations from the Federal Government to finance the much – needed infrastructural projects such as roads and bridges, basic facilities and amenities and medical facilities and services. Besides, the Federal funding is critically required in rebuilding dilapidated schools especially in rural areas to create an environment that is conducive for learning for the young generations.
Both the State and Federal governments will intensify programs to transform rural areas and to uplift the quality of life of the Rakyat therein. He expressed appreciation to the member for Batu Lintang, being an Opposition Member, making positive remarks as well as supporting the State’s prudent and sound financial management. Be rest assured that the Government will continue to move on with even greater zest and strive to manage financial resources wisely and prudently.
He said the revenue from timber is as follows: RM100 million from hill timber premium, which appears to be far short of the revised target of RM300 million. This is on the basis that the new premium rate of RM50 per cubic metre as compared to the old rate of 80 cents and RM3.00 per cubic metre, which only came into force on 1st July 2017 and the ovrall decline in timber collection The revised revenue from forest royalty for 2017 was estimated at RM343 million against target of RM520.15 million due to the decline in royalty collection, which is consistent with the anticipation of less production of logs.
The RM665 million allocations for Special Fund consist of an allocation of minor rural projects, Rural Transformation Projects and Special Development Assistance Fund. The allocations are meant for small programs and projects mainly in the rural States that will benefit the rakyat directly. In fact, the State Government conducts financial management in a most transparent and accountable manner.
For example, the Government has the mechanism to disperse funds to the people, who are in need of them. Every project is being implemented either through Resident Offices or through JKR. Dato Seri Wong Soon Koh dismissed the allegation by the opposition that the State Budget has the characteristic of concentration of power as a misleading statement. It must be made clear that the annual allocation for operating expenditure to the Chief Minister’s Department comprises of major expenditure cost such as ICT Services and equipment, rental of buildings, Air Charter Services, medical expenses and payment of recruitment for professional and management staff. Of course, the allocation also covers Digital Economy, disbursements of loan and grant, special fund for Minor Rural Projects and Rural Transformation Projects.
The programs and projects under these allocations are being implemented by various Ministries, Departments and Agencies. The Development Budget estimates for 2018 only reflect allocations for one year in tandem with project planning under RMK-11.
Distribution of annual allocations varies from year to year for implementation of program taking into consideration program priority of strategic projects. The 2018 Budget strategy is not only to take care of the people in rural areas though 53 percent out of the total allocation is allocated for rural programs and projects, but to the State economy as a whole to ensure sustainability of growth and provide economic opportunities for the people to exploit.
Dato Seri Wong Soon Koh reiterated that the progress and development of the State hinge significantly on its competitiveness, ability to drive development strategy particularly digital economy, rural transformation and facilitate investment for the future as well as to enable the private sector as the main engine of growth.
This requires collective effort of all stakeholders in leveraging on the strength and structure of the economy, the quality and talent of human capital and more importantly, the political stability and unity of the people. He said the people must value and preserve Sarawak’s admirable social harmony, ethnic diversity and the political stability that they have been enjoying to attract many more investors, tourists and friends to Sarawak.