KUCHING: The Office of the State Financial Secretary (SFS) has clarified that the shortfall in revenue collection for the year 2021 was RM745 million and not RM2.4 billion.
The clarification was in response to Padungan assemblyman Chong Chieng Jen who called upon Deputy Premier and Second Finance Minister Datuk Amar Douglas Uggah Embas to provide a detailed explanation for the RM2.5 billion shortfall in revenue from the estimated figure of the state’s revenue in 2021 during the State Legislative Assembly (DUN) sitting on Thursday (Dec 1).
The Office of the SFS explained that the estimated 2021 state revenue had been revised to RM8.365 billion and this was conveyed during the Special Session on the 2022 State Budget presentation held in October 2021 and stated in the Estimates of Revenue and Expenditure Book, 2022.
“With this revised revenue estimate, the shortfall in revenue collection for 2021 was RM745 million.
“It is not RM2.4 billion as understood by the Honourable Member for Padungan (Chong),” it said in a statement yesterday (Dec 2).
The Office of the SFS added the revenue estimates were revised in view of the economic landscape and financial performance caused by the COVID-19 pandemic.
“For 2021, the State Revenue Estimates prepared in 2020 was RM10.012 billion.
“The key assumptions made in the preparation of 2021 State Budget were based on the available information and trend forecast on the immediate and near-term outlook of global economic projection and commodities prices.
“The global economy was then expected to recover in 2021 with projected growth of 6 per cent by the International Monetary Fund (IMF). Malaysia’s economy was then expected to grow between 6.5 per cent and 7.5 per cent in 2021 while Sarawak economy was expected to grow between 6 per cent and 8 per cent.
“However, the COVID-19 pandemic was more persistent and has plunged most countries into recession. Rapid spread and threat of new variants have increased uncertainty about how quickly the pandemic can be overcome,” it said.
It added in 2021, many lockdowns worldwide were also seen. These had restricted global business activities and led to supply disruptions due to decrease in production in most sectors.
“This was felt by Sarawak with the drop in production of oil and gas which in turn affected our income from royalty on oil and gas and State Sales Tax (SST) from crude petroleum and Liquefied Natural Gas (LNG),” it said.
It also said the shortfall of RM745 million was mainly contributed by SST of 59 per cent, dividend receipts of 33 percent and interest income of 12 per cent.
“Variances in revenue from SST were due to lower collection from SST on crude petroleum and LNG, lottery, aluminium and tyre.
“As for dividend receipts, lower collection was due to the economic slowdown affecting the performances of oil and gas companies and other State investments.
“With regard to interest income, low Overnight Policy Rate (OPR) in 2021 at an average of 1.75 per cent per annum has affected earnings from interest income,” the Office of SFS said.
The major contributors to Sarawak revenue are mainly royalty on oil and gas, SST, dividend receipts, interest income, royalty on raw water and land premium.