Former Sabah CM slams proposed seafood export tax

Yong Teck Lee. (Bernama pic)

KOTA KINABALU: Former Sabah chief minister Yong Teck Lee today criticised the proposed imposition of an export tax on seafood, saying it will further stifle economic activity.

The Sabah Progressive Party (SAPP) president proposed that the government encourage seafood farmers to expand their farms to increase supply instead.

Recently, Sabah Chief Minister Mohd Shafie Apdal had said the state would impose a 5% state sales tax on all seafood exports with effect from Jan 1, 2019.

The tax was aimed at overcoming the local shortage of seafood products and to turn Sabah into a seafood haven for tourists, Shafie had added.

Yong blamed Sabah’s financial problems on decisions to stifle legitimate economic activities, such as the tax on seafood exports.

“Inbound tourism has dropped drastically. Oil palm prices keep falling. Logs cannot be exported. Sand mining is banned in some areas. So, construction costs shot up. Bank lending is slow.

“Prices are not coming down. Families have to set aside money for their school children. The worse is yet to come. Let me ask, do people have the money to pay for seafood?” he added.

Unfortunately, he said, instead of increasing production, the government had imposed a new tax on seafood that discouraged production.

Furthermore, Yong said the movement of seafood of Indonesian and Philippine origin that would have otherwise been exported via Sabah would now skip Sabah so as to avoid Sabah’s export tax.

He also urged the Sabah government to re-strategise its economic direction, including by enhancing co-operation with China to benefit from its economic growth policies in the region.

He said the continued decline of the price of palm oil and crude oil could deprive the Sabah government of RM500 million in revenue and cause a serious deficit for the state.

He said the Sabah Budget for 2019 had assumed that crude palm oil price would be RM2,400 per tonne. However the price had dropped to RM1,800.

The price of crude oil, he said, had declined to about US$63 per barrel while the budget had been formulated based on a price of US$70 per barrel.

“Federal leaders have used their own financial constraints as an excuse to deny Sabah’s 40% net revenue and the 20% in oil royalties.

“This is wrong because Sabah is only asking for part of whatever revenue collected from Sabah to be returned to Sabah.

“The taxes and oil come from Sabah in the first place. The federal government still gets to keep the big bulk of the revenue sourced from Sabah,” he told reporters today.

Yong said as the federal government had “refused to honour its constitutional duty” to reimburse 40% net revenue to Sabah and even reneged on its 20% oil royalties pledge, the Sabah government needed to re-look its own economic direction.

He said it was thanks to the accumulated balance of RM3.8 billion in the state Treasury in 2017, as published in the 2017 Auditor-General’s Report yesterday, that the Sabah government was not bankrupt right now.