The fundamental principle of the state government’s economic development is to strengthen economic foundation and improve the wellbeing of the local communities for a more balanced approach in development.
Arguably, the end purpose of all economic activities is for the well being of the people but, at the same time, if efforts are not made to take care of the economic future, then the state will likely be in no position to help the people in future.
Chief Minister, Datuk Patinggi (Dr) Abang Johari Tun Openg, in his winding speech on the Budget 2018 debate in the just- concluded sitting of the State Legislative Assembly, said Sarawak’s future direction of development would be the Digital Economy, oil and gas sector, urban transport system, rural infrastructure, private healthcare, modern farming and renewable energy.
He is passionate about Digital Economy and believes it is one of the best ways for Sarawak to become a developed state with high income economy. In this regard, the state government will focus on creating good jobs for young people and increasing economic opportunities for entrepreneurs and businesses. Johari said the state had no other options but to move forward.
Even countries like Thailand, Indonesia and Vietnam have opted for this route. The state had to be bold. Otherwise it will be left behind and possibly swallowed by technology and ICT applications of the neighbours. He is happy that Sarawak, after the International Conference on Digital Economy Sarawak last April, has been making good progress on the development of the Digital Economy.
Essentially, building the Digital Economy is about creating a new, better and more efficient way of living for the people of Sarawak. By saving time and money, the people of Sarawak can live in an efficient society. The Chief Minister said the state government would work hard to make a success of Digital Economy and called on the Opposition to give the project their full support for the good of the people and their constituencies.
All the ideas on Digital Economy must be implemented properly. He said all the projects would be streamlined through the Sarawak Multimedia Authority (SMA), with the primary purpose of making sure that the ICT developments including Digital Economy Sarawak were implemented properly in Sarawak- whether by Malaysian Communications and Multimedia Commission (MCMC), SACOFA, Sarawak Information Systems Sdn Bhd (SAINS) or by any other entities operating in Sarawak. He said the SMA, which would monitor all ICT developments, would set the policies on all issues pertaining to ICT developments.
This is the only way to control and determine the future of Sarawak in the digital era. Johari, who is also the Minister in charge of Digital Economy and Telecommunications, is heading the SMA as Chairman of the Board of Directors. The other members comprise experts in Digital Economy and ICT. The Board will deal with all matters including policies pertaining to the Digital Economy and the ICT. As Chairman of the SMA, he will have a clearer picture of the issues that will be presented to the Cabinet. As CEO of the government, his direct involvement in the SMA will ensure that he takes full accountability for the outcome of this initiative.
No responsible leader should embark on an initiative if he is not ready to shoulder the responsibility of seeing it through. For the SMA to have teeth, it must also have implementing agencies to oversee the implementation of projects. This is why the SMA also deals with financial matters, such as revenues, donations and making profits. Johari said all implementing agencies would be parked under an umbrella organisation called the Sarawak Digital Economy Corporation or SDEC, which would be a wholly owned subsidiary of the SMA.
SDEC would be run by a professional expert in the field of ICT. He said the SMA would set policies, which would be implemented by SDEC on Digital Government, Cyber Security, e-Commerce, Digital Infrastructure, Digital Innovation Entrepreneurship, Centre of Excellence, Talent Management and other areas. The Chief Minister said SDEC would farm out many of its jobs to the private sector as a way of giving good jobs to Sarawakians.
However, the contractors should not farm the jobs out to those overseas as the practice will defeat the purpose of trying to build home expertise. He said the setting up of the SMA was a way to exert Sarawak rights and interests in digital matters as the state had a vision and mission concerning these matters.
Besides, it also had own expectations of the desired end-results. He added the people would continue to exert Sarawak rights as enshrined in the Malaysia Agreement 1963 (MA63), an international treaty that could only be amended by all signatory parties. The federal government alone on its own could not amend an international treaty.
The other signatory parties were Sarawak Government, Sabah Government and the United Kingdom. Generally, Sarawakians, the new generation, are becoming more vigilant of the state’s rights and interests. They do not want wool to be pulled over their eyes; they can see clearly now.
The people are exerting their rights under MA63 because they want to safeguard the economic interests for the present and future generations of Sarawakians.
It is about reclaiming what has been given to them as their fair share of the earth. Johari stressed the state’s rights over the offshore resources were taken away by Acts of Parliament and not by State Legislative Assembly.
The Continental Shelf Act, 1966 vested the rights with respect to the exploration of the continental shelf and the exploration of natural resources in the Federation and these were exercisable only by the Federal Government. The Territorial Sea Act 2012 limited Sarawak’s territorial sea limits to three nautical miles. This Act purportedly was enacted, amongst others, to comply with the United Nation Convention on the Law of the Sea, of which Malaysia is a signatory. Under this Convention, the territorial seas of the nation states are limited to 12 nautical miles.
However, by unilaterally reducing the territorial sea of Sarawak to three nautical miles, the territorial sea of Sarawak is reduced by nine nautical miles. This affects the rights of the state to the natural resources within the territorial seas. The Chief Minister said the Petroleum Development Act 1974 provided that all the rights to exploration and exportation of petroleum both onshore and offshore in the Federation including Sarawak were placed under the sole authority of PETRONAS. He added, “This clearly is an act to exploit the petroleum resources of Sarawak.
By agreeing to compensate Sarawak in cash, the Federal Government has acknowledged the state’s rights to petroleum resources. “Wh i l e t h e P e t r o l e u m Development Act 1974 (PDA) gives PETRONAS the right to explore and mine for petroleum in Sarawak, our right to issuing mining leases are listed as part of the rights of Sarawak in the Federal Constitution. The power of the state to issue mining leases remains in the State List of the Federal Constitution.
“In exerting the state’s right to mining, even if the PDA has vested the rights to exploration and export of petroleum to PETRONAS by the Federal Government, it does not mean that the PETRONAS has the right to simply enter Sarawak territory, be it land or sea. Before PETRONAS can operate in Sarawak territory, PETRONAS must obtain the necessary licences or leases to operate within Sarawak’s territory.
“In exerting the mining rights of Sarawak in its own sovereign territory, the state does not say that it is not friendly to the petroleum business in Sarawak; the state welcomes the development of the petroleum industry in Sarawak.” He further added that the state government had set up Petroleum Sarawak Berhad or Petros to develop the petroleum industry in Sarawak.
The state had no intention of disrupting the normal business of the petroleum industry by exerting its mining rights under the Federal Constitution. The state government had decided to set up a high level special task force for the purpose of exerting the state rights over natural resources as enshrined in the Federal Constitution, IGC Report and the MA63. Johari said the task force would look at ways and means to exert the state’s rights.
Having a line of communication with the Federal Government on the rights as contained in the MA63 was only one of the ways. Doing whatever to exert of the rights was another way. The Chief Minister said the first shot on the state’s rights was fired three years ago when Sarawak sought to increase the petroleum royalty from 5 percent to 20 percent. Admittedly, the state had not succeeded in getting the 20 percent per se.
The crash in the oil price had created problems for government revenue as well as the viability of oil companies. Many oil companies had closed shop. At a time like this, trying to change the business model now was a very sensitive matter. He assured this did not mean that the state was not pursuing the interests in petroleum. An increase in the petroleum royalty was an easy way to raise cash for Sarawak. Since then, the state has learnt that there are more ways than one to skin a cat. For example, the state had learnt to be a bit more sophisticated in its approach to raise its stakes in the petroleum resources. The state was building the oil and gas industry in Sarawak in addition to the royalty. This was the purpose of setting up Petros.
“The state government wants more Sarawakians to be involved in the petroleum business in Sarawak. This will increase the income of Sarawakians, who work in the petroleum industry. The skills being built will be invaluable to Sarawak,” pointed out the Chief Minister.
He explained that the state wanted to use the local gas resources to power the development of other industries in Sarawak as well. Besides, as oil and gas are depleting resources, the state had to leverage on them to build other non-oil and gas industries as a means of diversifying its economy.
Johari said that the increase in royalty was also an attempt to raise the state’s revenue. This could be done by taking a major stake in any of the petroleum operations in Sarawak, including on a production sharing contact (PSC) basis. Of course, in any commercial dealings, the state government has to undertake due diligence to ensure that proposals were commercially viable, with the help of Petros. The Chief Minister said many of the things being done were new to Sarawak. However, the people must have faith and courage combined with skills and determination to ensure they would succeed.