Abang Johari counts victories as Putrajaya devolves powers

Abang-Johari-Abang-Openg_sarawak_600KUCHING: Sarawak Chief Minister Abang Johari Openg said talks with Putrajaya on the devolution of powers are progressing smoothly.

“The devolution of power process, which started on Jan 20, 2016, between the Sarawak government and the Malaysian federal government, has so far been progressing smoothly and surely,” Abang Johari told the Sarawak assembly during his winding-up speech today.

“Some have been implemented while others are still being implemented,” Abang Johari said in describing the progress of the talks.

The first phase involved administrative empowerment and resulted in an agreement on 13 points of empowerment.

The second phase concerns constitutional and financial matters, particularly the issues of oil exploration, mining and gas, legislation, revenue from land, education and labour, and the state’s public service.

On the issue of finance, the chief minister said it was agreed that a review will be conducted as per the Review of Special Grants under Article 112D of the Federal Constitution. This includes the issue of import and excise duties on petroleum products.

The federal government also agreed that Sarawak has the authority to pass laws on the distribution of gas in Sarawak, and that the Gas Supply Act (Amendment) 2016 will not apply to the state.

Additionally, the views of Sarawak on the issue of the Revenue from Land (Stamp Duty) and Territorial Sea Act 2012 have been forwarded to Putrajaya.

Another small victory was Sarawak’s exemption from the cabotage policy, a maritime law that requires all international goods to pass through Port Klang before entering Sarawak.

“I wish to thank the prime minister for agreeing to the exemption of Sarawak from the cabotage policy with effect from June 1, 2017,” Abang Johari said.

“In the case of Sarawak, which became part of Malaysia not by natural geographical proximity but for political reasons, it is correct for us to pursue Sarawak-centric policies which require that international shipping should be allowed directly into the main port or ports of Sarawak.

“No doubt our domestic transport and logistics system is still very basic, simply because the volume is small. We have to build up the volume to have the critical mass for domestic cargo movements in order to enjoy economies of scale and hence lower costs.

“But it does not help when the cost of goods, due to the low volume, is also being burdened by additional costs that come as a result of the roundabout transportation route that must be followed in pursuit of cabotage.”

Abang Johari expressed hope that the exemption of Sarawak and Sabah from the cabotage policy would allow international trade to grow.

He also said it was a “strategic” benefit for the Sarawak government to have acquired the Bakun dam this year.

The price for the Bakun dam is RM2.5 billion in cash and RM5.6 billion in net debts outstanding as of end-December 2016. The finance ministry continues to provide a government guarantee and letter of undertaking for the loans.

The RM2.5 billion cash buys the entire equity of Sarawak Hidro Sdn Bhd, as well as the special rights redeemable share.

It will be paid for by Sarawak Energy Bhd’s internally generated funds and loan facilities. The net debt of RM5.6 billion will be repaid purely by the cash flows generated by the Bakun dam facility itself over the remaining duration of the loan – 15 years.

The life span of the dam is expected to be far beyond the 60-year generation licence period given by the government.

He said without ownership, “we do not have full control of the dam and therefore the dam may not be maintained in the best manner that it can be”.

“Because it is a strategic asset, which we must treasure, we must therefore own it and take care of it.

“This indeed makes very good business sense. The Bakun dam is commercially viable. Once the debts are paid, the Bakun dam will become another source of income for the Sarawak government,” Abang Johari said.