Zahid’s oil royalty promise ‘too good to be true’

PETALING JAYA: A promise by Barisan Nasional of full royalties to all oil-producing states has been dismissed by two political analysts as being “too good to be true”.

Political analyst Awang Azman Pawi of Universiti Malaya said the people of Sabah and Sarawak, in particular, were “wiser” when it came to such promises, having been under BN’s rule for more than 55 years.

“The promise of full royalties and direct funding for the states is too good to be true,” he said. “If Pakatan Harapan cannot fulfil their promise, what more the BN which had all this while failed to fulfil the Malaysia Agreement 1963 issue?”

The recent promise was made by BN chairman Ahmad Zahid Hamidi in an online live video broadcast. He said the PAS-Umno alliance would give full royalties to all states that produce oil – not just Sabah, Sarawak, Kelantan and Terengganu – while state governments would receive direct funding instead of project allocations.

Azman told FMT that BN had previously made Sabah and Sarawak accept deals that did not benefit them, relegating them to being of equal standing as the other Peninsula states.

“At the time Sarawak suffered communist threats, which made the state government succumb to BN to ensure the state’s safety was protected.”

He said East Malaysians should be wary about which coalition takes power in Putrajaya, but reiterated that Sabah and Sarawak should have autonomy no matter which party takes over.

“There’s no need to get too hung up over BN or PH’s promises,” he added.

Another policy analyst, Azmi Hassan of Universiti Teknologi Malaysia, said the promise of full royalties made sense as a political strategy but Zahid was promising something that was difficult to execute.

“The offer demonstrates the reality of the current political scenario where both Borneo states are not satisfied with the PH government on this particular issue. States that are not run by PH, especially Sabah and Sarawak, are questioning all policies, including fiscal policies, imposed by the federal government,” he said.

“I think Zahid is just applying what PH did before GE14 when they promised something that is difficult to fulfil. But in the case of oil royalties, it is something that can be done quite easily,” he said.

Azmi told FMT that paying out full royalties for oil-producing states could be done if it was executed in tandem with the state government allocations in the yearly budget.

“This is where the balancing act comes into place. For states receiving full oil royalties, I presume the state allocation will be much less. Using this formula I think the full royalties is doable.”

However paying out full royalties would be detrimental to Petronas’s income and would affect future investments by drastically reducing the company’s capital expenditure. - FMT

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