Budget 2020 had been tabled, but 20% oil royalty for Sabah and Sarawak remains uncertain


The issue of increasing the oil royalty for Sabah and Sarawak became trending as the tabling of Budget 2020 on October 11 was approaching.


It was promised in the Pakatan Harapan Manifesto that the new government will increase the oil royalty for the states in East Malaysia from 5% to 20%.



In the past one-month period, Sabah Chief Minister Datuk Seri Shafie Apdal was the most active figure to address the oil royalty issue, coming out with 288 statements on the matter.


Prior to the tabling of Budget 2020, Shafie stood firm on the 20% oil royalty demand despite Prime Minister Tun Dr Mahathir Mohamad saying that the 15% increment in oil royalty for East Malaysia will lead to the demise of Petroliam Nasional Berhad (Petronas).


On the other hand, Sarawak Chief Minister Datuk Patinggi Abang Johari Tun Openg only gave 50 statements on the issue.


He said that the state government had submitted a new formula for oil royalty deduction to the federal government. Johari added that Sarawak did not ask for the 20% oil royalty, but it was the government which made promise to the state.


Following the tabling of the Budget 2020, Economic Affairs Minister Datuk Seri Azmin Ali announced that the oil royalty will be given in cash to oil-producing states such as Kelantan, Terengganu, Sabah and Sarawak.


However, the oil royalty rate has yet to increase. As of for now, the old rate of 5% still applies.



The Finance Minister did not speak much about the oil royalty for Sabah and Sarawak. Instead, he revealed that the federal government has already paid the oil royalty to Kelantan, while the payment to Terengganu is still being processed.


Regardless, Budget 2020 tabled special grants to Sabah and Sarawak to the amounts of RM53.4 million and RM32 million respectively.


To this, Shafie expressed his gratitude to Putrajaya for doubling the special grant for Sabah, from RM26.7 million to RM53.4 million.