Ucapan penggulungan Menteri Kewangan dan Ekonomi Baru Kedua
Datuk Amar Douglas Uggah Embas
Persidangan Dewan Undangan Negeri Sarawak (6 Mei-15 Mei 2024)
Tuan Speaker,
First of all, I would like to express my utmost appreciation to Tuan Yang Terutama Yang di-Pertua Negeri Sarawak, Tun Pehin Sri Dr. Haji Wan Junaidi bin Tuanku Jaafar for his maiden opening address in the First Meeting of the Third Session of the Nineteenth Dewan Undangan Negeri on 6th May 2024. His Excellency’s address will serve as earnest advice and invaluable guide for us as we discharge our duties and responsibilities, and will help us to steer Sarawak towards achieving its goal of becoming a high-income economy and a prosperous society by 2030.
2. I would also wish to extend my warmest and heartiest congratulations to His Excellency Tun Pehin Sri Dr. Haji Wan Junaidi bin Tuanku Jaafar on his appointment as the eighth Governor of Sarawak. am confident that His Excellency’s distinguished credentials and wide experience in both administrative and political arena would bring Sarawak to greater heights.
Tuan Speaker,
3. On this occasion, I would like to extend my deepest condolences to the family of the late Tun Pehin Sri Haji Abdul Taib Mahmud, our former Governor of Sarawak who returned to the mercy of God on 21st February 2024. The late Tun Pehin Sri was a visionary leader whose efforts significantly modernized Sarawak, elevating the economic status and improving the living standards of Sarawakians. His legacy of transformative leadership will undoubtedly be remembered.
4. His contributions were invaluable, particularly during his 33 years as Chief Minister and 1O years as the Governor of Sarawak. His efforts to foster inter-ethnic unity have been instrumental in creating a harmonious Sarawak, and allowing us to celebrate diversity across religions, political beliefs, and cultures. May his soul rest in peace.
Tuan Speaker,
ECONOMIC PERFORMANCE 2023 AND PROSPECTS FOR 2024
5. I would now like to update this august House on the world, nation, and the State latest economic performance and its outlook for 2024.
Global Economic Performance 2023 and Prospect for 2024
6. The global economy demonstrated significant resilience in 2023 despite the challenges posed by slow recovery from the COVID-19 pandemic, Russia’s invasion of Ukraine, Middle East conflict and the cost-of-living crisis. The International Monetary Fund in its World Economic Outlook April 2024 estimated global growth to be 3.2 percent in 2023. This represents an upward revision of 0.2 percentage points from the October 2023 World Economic Outlook estimates, attributed to the notable strength revealed by both the Advanced Economies and Emerging Markets and Developing Economies.
7. Robust consumer spending, supportive monetary policy and continued improvement in the labour market contributed to stronger-than-expected 2.5 percent growth in the United States in 2023. Whilst the Euro Area experienced slower than expected growth of 0.4 percent, partially due to its high exposure to the conflict in Ukraine that resulted in disruptions to trade routes and supply chains.
8. Meanwhile, the China economy grew at 5.2 percent in 2023 driven by increased demand for services and resilient manufacturing investment and government spending on infrastructure. Growth in its high-tech manufacturing industry continues to be strong at the beginning of 2024. Overall, for 2024, the risk for China economy focuses on the deepening of property sector woes.
9. As for India, its economy grew at 7.8 percent as a result of increased private consumption and investment, plus its government’s push for infrastructure development.
10. Inflation has subsided in many countries. Global inflation was estimated to have eased from 8.7 percent in 2022 to 6.8 percent in 2023, reflecting declines in oil and food prices. The downward trend of global inflation is expected to continue in 2024, with the rate expected at 5.9 percent. Nonetheless, the downside risks remain. Escalating tensions in the Middle East may cause a shock to oil prices. With elevated inflation, this may mean further tightening of interest rates.
11. The rising trade distortions and increasing fragmentation between economic power and geopolitical influence are anticipated to persist. This will exert downward pressure on global trade bringing to an increase of only 3.0 percent in 2024. This growth remains below the world trade historical average growth of 4.9 percent.
12. Against the backdrop of several adverse risks to global growth, the global economy is forecasted to grow at 3.2 percent in 2024.
Malaysia Economic Performance 2023 and Prospect for 2024
13. In 2023, the Malaysia economy grew at a slower than expected rate at 3.7 percent, on the back of persistent softening in global trade, global tech downcycle, geopolitical tensions and tighter monetary policies. Overall, the economy was supported by resilient domestic demand, recovery in tourism activities, and improvement in the labour market and wages. Meanwhile, Malaysia achieved a milestone with the highest approved investment in its history, totalling RM329.5 billion in 2023.
14. Malaysia’s inflation moderated to 2.5 percent in 2023. Inflation continued to subside into the first two months of 2024, bringing down the inflation rate to 1.7 percent in comparison with 3.7 percent in the corresponding period of 2023. Over the same period, there was a significant drop in food prices from 7.0 percent to 1.9 percent. On the contrary, inflation for housing, water, electricity, gas, and other fuels increased in the first two months of 2024 on account of a higher cost of building materials and the upward revision in water tariffs in early February. Nonetheless, inflation for 2024 is forecasted to be within a manageable level of 2.1 percent to 3.6 percent.
15. In 2024, Malaysia economy is poised to grow between 4.0 percent and 5.0 percent, propelled by a resurgence in exports and robust domestic spending. Household consumption is forecasted to benefit from sustained employment growth and increasing wages.
Tuan Speaker,
Sarawak Economic Performance in 2023 and the Prospects for 2024
16. I shall now update this august House on the Sarawak economy. Sarawak economic growth is expected to moderate to around 4.0 percent in 2023. This growth is largely supported by domestic demand, which partly offset the softening impact of export growth.
17. On the supply side, the services sector is estimated to grow at 7.4 percent in 2023, spearheading Sarawak’s economic growth. There was a notable surge in visitor arrivals, reaching 6.9 million by the end of 2023, marking a two-fold increase compared to the previous year. This proved that our concerted efforts to attract visitors for both tourism and business events yielded significant results. For the first three months of 2024, Sarawak registered a total of 2.0 million visitors, a 22.3 percent increase compared to the corresponding period in the previous year. This provided support to the growth in the wholesale and retail trade, restaurant, accommodation, and transportation businesses.
18. Meanwhile, the subdued production and sluggish external demand for liquefied natural gas (LNG) contributed to slower growth in the manufacturing sector in 2023. At the same time, growth in the mining sector is estimated to contract by 0.1 percent, primarily stemming from a deceleration in crude oil production and a reduction in natural gas output due to unplanned plant shutdowns. However, a rebound in growth is forecasted for 2024, driven by supportive global energy prices and augmented natural gas production, notably from the Kasawari field and enhanced output from existing gas fields.
19. As for the agriculture sector, there was a notable increase of 5.3 percent in the production of crude palm oil (CPO) in 2023, supported by an increase in matured planted areas and a higher yield of fresh fruit bunches (FFB). There was also a higher extraction rate for CPO at 19.83 percent in 2023 compared with 19.47 percent in 2022. During the year, CPO prices averaged RM3,755 per tonne in Sarawak. Production of CPO is expected to increase further in 2024. In the first quarter of 2024, Sarawak has witnessed an increase of 7.0 percent in CPO production with FFB yield recorded at 3.08 tonne per hectare compared with 2.87 tonne per hectare in the corresponding period of 2023.
20. The construction sector is expected to perform favourably at 5.7 percent in 2023. This is supported by growth in the property sector, notably in the residential segment, and supported by the implementation of strategic infrastructure and utilities projects under the 12th Malaysia Plan. The momentum of growth in the construction sector is forecasted to continue into 2024, particularly in the civil engineering works.
Demand Side
21. On the demand side, growth in 2023 is driven largely by domestic demand. The continuing initiatives from both the Sarawak and Federal Governments, namely the monthly electricity bill discount initiative under the Sarawakku Sayang Special Aid programme and financial assistance under Sumbangan Tunai Rahmah (STR), have provided a cushion to the rakyat, especially in mitigating the effects of rising prices on households’ purchasing power. With the improvement in employment, overall private consumption is estimated to expand by 5.3 percent in 2023.
22. Meanwhile, public consumption is anticipated to surge by 9.0 percent in 2023. This robust growth is underpinned by sustained spending on emoluments and other operational expenses aimed at enhancing the capacity and capability of the Sarawak Civil Service, thus facilitating more efficient service delivery to the rakyat.
23. On the investment front, a total of RM9.2 billion investment was approved in the manufacturing sector in 2023, particularly in electrical and electronics and the basic metal industry. At the same time, investment in capital goods increased by 5.4 percent compared with the previous year. This increasing trend continues into the first two months of 2024, whereby Sarawak also witnessed a 7.4 percent increase in the import of capital goods. Continuous efforts made by the Sarawak Government to diversify Sarawak’s economy are expected to encourage more private investment in 2024. In the first quarter of 2024, a total of RM132 million worth of investment in the manufacturing sector was approved, while a potential RM2.3 billion worth of investment received is still under consideration.
24. As for public investment, RM7.2 billion was expended in 2023 for the implementation of development programmes and projects. In 2024, the Sarawak Government has approved the allocations of RM9.0 billion and RM5.5 billion under the Development Budget and Alternative Funding, respectively. Both allocations will accelerate the 12th Malaysia Plan projects implementation which are expected to further increase development momentum in Sarawak. Besides, a total allocation of RM5.8 billion approved by the Federal Government for development purposes will further augment Sarawak’s development and economic growth in 2024.
25. External demand, on the other hand, experienced a slowdown in 2023. Total trade declined by 11.1 percent after experiencing a contracted growth of 14.8 percent in exports and 2.5 percent in imports. This decrease in export growth was attributed to lower demand for LNG and crude petroleum, alongside a moderation in commodity prices. The average price of Brent crude oil dropped from USD100.9 per barrel in 2022 to USD83 per barrel in 2023. Additionally, the export value of crude palm oil contracted by 19.7 percent. Nonetheless, in the first two months of 2024, there was a notable increase in total trade for Sarawak, expanding at 11.6 percent compared with the corresponding period of 2023. We anticipate this trend will continue in 2024 with improvement in global trade.
26. In anticipation of improved external demand and increased domestic activities in 2024, alongside lower inflation, Sarawak economy is expected to remain resilient and poised to achieve a growth rate between 5.0 percent and 6.0 percent in 2024.
Tuan Speaker,
Inflation
27. Sarawak’s inflation remained at 3.2 percent in 2023. Nonetheless, the rate gradually softened from 4.3 percent in January 2023 to 2.4 percent in December 2023. This was particularly driven by a moderation in inflation for food and non alcoholic beverages as well as falling oil prices.
28. From January to February 2024, we continue to experience the softening of inflation in Sarawak, averaging “1.9 percent. This gradual decrease is expected to continue throughout 2024 bringing the inflation rate to a manageable level of 2.5 percent to 3.0 percent.
Labour Market
29. In 2023, the labour market in Sarawak demonstrated continued stabilisation, with a preliminary unemployment rate at 3.5 percent. At the end of 2023, Sarawak boasted 240,529 job vacancies, with 17.0 percent of these positions designated for highly skilled professionals.
Tuan Speaker,
PERFORMANCE OF PROJECTS IMPLEMENTATION UNDER THE TWELFTH MALAYSIA PLAN (12MP)
30. I wish to update this august House on the implementation of various development programmes and projects under the 12MP in Sarawak.
12MP State Funded Projects
31. A total of 1,391 State funded projects with a ceiling of RM37.98 billion has been approved. Of this amount, 997 or 72 percent are physical projects while the remaining 394 or 28 percent are non-physical, including grants, contributions, investments, programmes, and events.
32. As of 31st March 2024, out of 997 physical projects, 210 projects or 21 percent have been completed while the remaining 787 projects, or 79 percent are still at various stages of implementation. Cumulative expenditure from the year 2021 up to 31st March 2024 was RM19.1 billion or 50 percent against the total 12MP ceiling. The Government will continue to expedite the implementation of the planned projects and at the same time, introduce new measures to reduce and mitigate sick and delayed projects. This includes the appointment of rescue contractors and ensure that mobilization of works commence within one (1) month upon issuance of Letter of Award.
Performance of Rural Transformation Projects (RTP)
33. Under the 12MP period, a total of 7,808 rural transformation projects with an allocation of RM1.64 billion have been approved. As of 31st March 2024, a total of 5,231 projects, or 67 percent, have been completed while the remaining 2,577 projects, or 33 percent, are still at various stages of implementation. Cumulative expenditure from the year 2021 up to 31st March 2024 was RM1.227 billion or 75 percent against the total approved allocation.
Performance of Projek Rakyat
34. The 2024 Sarawak Budget demonstrates a strong commitment to accelerate rural development through substantial allocation of RM550 million for Projek Rakyat. As of April 2024, a sum of RM74 million has been expended. These projects are at various stages of implementation, signifying tangible progress towards achieving rural development goals.
Tuan Speaker,
12MP Federal Funded Projects
35. Under the First Rolling Plan (RP1) of 12MP, the Federal Government approved a total of RM3.34 billion for the implementation of 921 projects. In terms of financial performance, a sum of RM1.97 billion, or 59 percent of the approved allocation, had been expended as of 31st December 2021.
36. Under the Second Rolling Plan (RP2 of 12MP), a total of RM3.24 billion had been allocated for the implementation of 960 projects. In terms of financial performance, RM3.09 billion or 95 percent of the allocation had been expended as of 31st December 2022.
37. Under the Third Rolling Plan (RP3 of 12MP), a total of RM4.4 billion had been approved for the implementation of 1,042 projects of which RM4.16 billion or 95 percent of the allocation had been expended. Out of 1,042 projects, 876 are projects that were continued from previous Rolling Plan. In terms of physical performance, 320 projects have been completed and the balance are at various stages of implementation.
38. Meanwhile, under the Fourth Rolling Plan (RP4 of 12MP), a total of RM5.8 billion has been approved for the implementation of 1,088 projects, of which RM1.28 billion or 22 percent of the allocation has been expended. Out of 1,088 projects, 396 are continuation projects from the previous Rolling Plan. As of April 2024, 191 projects have been completed, while the balance are at various stages of implementation.
Tuan Speaker,
PERFORMANCE OF PROJECT IMPLEMENTATION UNDER ALTERNATIVE FUNDING
39. Allow me to update this august House on the financial performance of projects implemented under Alternative Funding.
40. To date, a total sum of RM12.523 billion has been expended for the implementation of the following major development projects:
i) RM3.937 billion for the construction of the Coastal Road and Second Trunk Road projects;
ii) RM2.824 billion for Sarawak Water Supply Grid – Stressed Areas;
iii) RM1.526 billion for the Rural Electricity Scheme Projects;
iv) RM1.90 billion for the implementation of projects by the three regional development agencies under RECODA namely Upper Rajang Development Agency (URDA), Highland Development Agency (HDA), and Northern Region Development Agency (NRDA);
v) RM693.0 million for the projects under the Integrated Regional Samarahan Development Agency (IRSDA);
vi) RM527.0 million for the implementation of Kuching Urban Transportation System (KUTS);
vii) RM395.0 million for the construction of the Sarawak Multimedia Authority Rural Telecommunication (SMART) tower and Sarawak Rural Broadband Network (MySRBN) through Sarawak Digital Economy Corporation (SDEC);
viii) RM183.0 million for the digital empowerment programme and the construction of digital infrastructure and telecommunication towers;
ix) RM156.0 million for the construction of State Administrative Centers in Jepak, Limbang, and Lawas;
x) RM144.0 million for the construction of CENTEX in Lundu, Dalat, and Lawas, and UTS Mukah Laila Taib Campus;
xi) RM114.0 million for the construction of Sarawak International schools in Kuching and Siburan;
xii)RM51.0 million for construction of Bebuling STOLPort in Betong;
xiii) RM38.0 million for the development of the new Sarawak Civil Service Leadership Institute in Santubong; and
xiv) RM35.0 million for the construction of the State Archive Building in Kuching.
Tuan Speaker,
FINANCIAL PERFORMANCE FOR THE STATE 2023 AND THE FIRST QUARTER 2024
41. Now, I would like to highlight the financial performance of the State for the year 2023 and the first quarter of 2024.
Revenue, 2023
42. Sarawak generated a total revenue of RM13.311 billion in 2023, a record-breaking and the highest ever revenue collected in its history. This remarkable achievement was attributed to our continuous revenue re-engineering efforts as mooted and driven by our YAB Premier. This revenue collection is higher by RM1.401 billion or 12 percent compared to the revenue collected in 2022 of RM11.910 billion. The higher revenue collection was mainly contributed by receipts from compensation in lieu of oil and gas rights, dividends and interest incomes, State Sales tax, and Special Grant.
43. For the information of this august House, the State Sales Tax on oil and gas is the major contributor to the overall State revenue. As of March 2024, it has contributed a total sum of RM17.01 billion to the State coffer since its introduction on 1st January 2019.
Ordinary Expenditure, 2023
44. In 2023, Sarawak spent a total sum of RM11.369 billion approved for the year on Ordinary Expenditure, of which RM4.569 billion was expended on operating expenditures while RM6.8 billion was appropriated to the Development Funds Account to finance the implementation of various development programmes and projects.
Development Expenditure, 2023
45. With regards to development expenditure, the State expended a sum of RM?.191 billion out of RM8.006 billion or 89.8 percent of the total Development Budget for the year 2023.
Tuan Speaker,
46. Now, allow me to update the members of this august House on the performance of State revenue and expenditure for year 2024.
Revenue,2024
47. For the year 2024, the State’s revenue projection was at RM12.749 billion. As of 31st March, a sum of RM4.798 billion or 38 percent of the projected revenue has been collected, contributed by the following major sources:
i) State sales tax of RM1.462 billion;
ii) Cash compensation in lieu of oil and gas rights of RM1.234 billion;
iii) Dividends of RM1.303 billion particularly from the State’s investment in MNLG Group of Companies;
iv) Raw water royalty of RM162 million;
v) Interest income of RM304 million;
vi) Forestry receipts of RM61 million;
vii) Land premium of RM31 million;
viii) Federal grants and reimbursement of RM24 million; and
ix) Other sources such as mining royalties, water sales and land rents of RM217 million.
48. Based on the performance thus far, we are confident that we can achieve the targeted revenue projection for this year, barring any unfavourable circumstance at the geopolitical level globally which could adversely affect oil and gas markets.
Expenditure, 2024
49. On the expenditure side, we have spent RM1.119 billion or 9.1 percent of the approved Ordinary Expenditure as of 31st March this year, while a sum of RM441 million or 4.8 percent has been expended for the Development Expenditure for the same period.
50. These expenditures are expected to pick up towards the second half of the year in tandem with the progress of the programmes and projects implementation.
51. Towards this, I urge all Controlling Officers and Heads of Departments to intensify their efforts in ensuring the successful execution of programmes and projects within their purview. It is crucial that these projects are delivered on time, within budget, and most importantly, that they achieve their intended outcomes. I also would like to see Heads of Departments and Officers in charge of projects to go to the ground, ‘turun padang’ on frequent basis, so that they know the actual problems and issues and be able to resolve these expeditiously.
Tuan Speaker,
REVENUE RE-ENGINEERING
52. I would like to enlighten this august House on the progress of the revenue re-engineering initiatives undertaken by Sarawak Government.
Implementation of State Sales Tax on Export of Selected Timber Products
53. In the previous Dewan Undangan Sarawak sitting in May 2023, I reported that the Sarawak Government had approved the imposition of State Sales Tax (SST) on the export of selected timber products effective 1st June 2023. I am pleased to report that we have successfully collected RM14 million in 2023. For 2024, Sarawak is projected to collect RM33 million and as of 31st March this year, a sum of RM8.3 million has been collected.
Introduction of State Sales Tax on Export of Ferroalloys and Polysilicon
54. I also wish to inform this august House that the Sarawak Government has approved the introduction of SST on the export of ferroalloys and polysilicon, at the rate of 1.5 percent effective 1st September 2024.
55. The SST rate of 1.5 percent on the export of ferroalloys and polysilicon is a fair and reasonable rate on the affected companies as they are also enjoying other tax incentives from the Federal Government and favourable power rates from the State. The revenue generated from this source will give us fiscal flexibility in enhancing our socio-economic development efforts which would include among others, implementing clean and renewable energy initiatives.
56. Moving forward, Sarawak Government will continue to explore new opportunities to enhance and diversify our revenue sources. This is imperative as we continue vigorously in pursuing our development agenda so that no one will eventually be left behind.
Tuan Speaker,
SARAWAK PUBLIC FINANCIAL MANAGEMENT TRANSFORMATION PROGRAMME
57. I also wish to enlighten this august House on the initiatives undertaken by the Sarawak Government towards enhancing the effectiveness and efficiency of our financial management.
58. Sarawak has embarked on the Public Financial Management Transformation Programme, in short PFM, which sets a new and high benchmark for financial management emphasizing on efficiency, accountability, and strategic alignment. PFM is fostering a transparent and result-oriented public financial ecosystem which would ultimately ensure efficient allocation of resources that contribute directly to the State’s developmental milestones set under Post COVID-19 Development Strategy (PCDS) 2030 and beyond.
59. Under the PFM, two key programmes have been initiated.
There are:
i) Management of Fiscal Risks; and
ii) Results-Based Budgeting.
Implementation of Result-Based Budgeting (RBB)
60. In collaboration with the World Bank, State Financial Secretary’s Office has begun to lay the groundwork for this transformative journey. Our immediate focus has been to kick-start the Results-Based Budgeting (RBB) process, which marks a paradigm shift from traditional budgeting methods. This new approach emphasizes measurable outcomes and impacts rather than mere inputs and outputs, aligning Sarawak’s objectives to ensure that its public expenditures result to quantifiable, impactful, and meaningful outcomes.
61. In December of last year, the World Bank team conducted a comprehensive Gap Analysis on our current budgeting system, leading to a detailed intervention plan that sets the stage for RBB’s full implementation by financial year 2026. Collaboration with the World Bank on such a major initiative will greatly improve and strengthen our public financial management and budgeting system, so that it can be at par with those in developed nations.
62. We have made some progress with several workshops being organized involved key stakeholders across various ministries, departments, and agencies. These workshops have been instrumental in raising awareness about RBB, introducing its core components and Strategic Performance Plan Frameworks. The next phase of our implementation will include statewide awareness programmes, Train-Of-Trainer sessions, and further workshops on Integrated RBB.
63. Recently, the Sarawak Government has approved the RBB Policy Circular, which serves as a definitive guide for the implementation of RBB within Sarawak’s public sector. This policy encapsulates essential elements such as accountability, the roles of central agencies, and a strategic implementation process, ensuring a unified approach across all levels of government. It outlines the fundamental elements of integrated results planning, budgeting, monitoring, evaluation, and performance reporting, thus providing a structured pathway for our ministries, departments, and agencies in their budget management.
64. RBB is not just about allocating funds; it is about linking these funds to specific results. This method enhances accountability, improves resource allocation, increases efficiency, and supports better decision-making. It fosters a culture of innovation, adaptability, and continuous improvement within our government operations.
65. Furthermore, by making our budgeting decisions transparent and directly linked to outcomes, we enhance communication with stakeholders and the public, ensuring they understand the rationale behind our financial decisions. This approach not only builds trust but also demonstrates the tangible impacts of public spending, engaging our people in the governance process.
66. As we align our practices with those of the Federal Government, which has been adopting Outcome-Based Budgeting since 2013, we reaffirm our commitment to adhering to the best practices in public financial management. This Whole-Of Government approach ensures that every Ringgit spent is an undertaking towards a more prosperous, sustainable, and resilient Sarawak.
TRANSFORMATION PROGRAMME FOR STATE STATUTORY BODIES AND GOVERNMENT-LINKED COMPANIES (GLC)
67. In addition, the Sarawak Government is also collaborating with the World Bank to review existing Statutory Bodies and Government-Linked Companies regulatory and monitoring frameworks. The study is divided into two (2) phases:
i) Phase 1 covered an assessment on the adequacy of the current governance framework of Statutory Bodies and Government-Linked Companies, collectively known as State-Owned Enterprises (SOEs), in delivering their objectives and mandates effectively. This phase has been completed in July 2023.
ii) With completion of Phase 1, we are currently embarking on Phase 2 on the formulation and preparation of a comprehensive SOEs Reform Programme. This phase is focusing on strengthening the regulatory framework and ownership policy by reviewing the existing laws and regulations, developing the SOEs Ownership Policy and formulating the Corporate Governance Code. In addition, a digitalised monitoring system will be developed to achieve a more systematic, real-time delivery of information and performance to the stakeholders.
68. As part of continuous efforts to strengthen the corporate governance of SOEs, we have also introduced the following initiatives:
i) Introduction of the State Dividend Policy in August 2022 which mandated GLCs to declare an annual dividend of at least 10% of their Profit-After-Tax. This is to maximise the dividend returns from the GLCs within the boundary of the laws. With the implementation of this Policy, payment of dividends received from GLCs has increased by more than 100 percent in 2023 compared to 2022. This contributes additional revenue to Sarawak for socio-economic development purposes, while at the same time inculcating financial discipline, promoting performance driven culture, and creating greater sense of accountability among all GLCs.
ii) Investment Policy and Guidelines for SOEs and Sarawak Local Authorities (SLAs) have just been issued, aimed at providing comprehensive advises for the formulation of their investment policy. This will ensure that funds are invested and managed properly and sustainably with calculated risks. This Policy is an important document and forms an integral part of good governance in managing fund for SOEs and SLAs. Having an investment policy will enhance the quality of decision-making and demonstrate a commitment to the fiduciary care of public funds. This will provide confidence to the Government, Board of Directors, and all relevant stakeholders on the management of investment activities by these entities.
iii) Guidelines on Preparation and Presentation of Annual Reports of State Statutory Bodies and State Local Authorities were issued in April 2024, aimed at providing a uniform Annual Report reporting format. Having this standard reporting will assist the stakeholders to understand the agencies’:
(a) objectives, functions, and operations as well as annual planning and direction;
(b) the overall financial position;
(c) impacts and outcomes of programmes and projects on targeted group; and
(d) status on provision of resources and assistance by the Government.
iv) Adoption of Malaysian Public Sector Accounting Standard (MPSAS) for Sarawak Statutory Bodies and Local Authorities. This adoption is to improve transparency and governance in managing public monies. MPSAS, issued by the Accountant General’s Department of Malaysia in accordance with the Ministerial Function Acts 1969, which came into effect on 1st January 2017, must be followed by all public sectors in Malaysia. It has been formulated based on the International Public Sector Accounting Standard (IPSAS) which has procedures for the recognition, measurement, and disclosure of specific public sector matters. These procedures are not found in Malaysia Financial Reporting Standard (MFRS) and Malaysia Private Entity Reporting Standard (MPERS);
v) State-Owned Enterprises Monitoring System (e SOEs) is at the final stage of development and expected to go live by the end of 2024. This e-SOEs, among others, will enable online submission of the accounts as required in the Statutory Bodies (Financial and Accounting Procedure) Ordinance, 1995. This effort will improve efficiency in monitoring activities and effective decision-making based on timely information at hand.
Tuan Speaker,
PRUDENT SPENDING
69. With ongoing commitment to sustainability and efficiency, we continue to reinforce strict financial disciplines and controls. In this regard, a Circular on prudent spending – Surat Pekeliling Setiausaha Kewangan Negeri Sarawak Bil. 5/2024: Garis Panduan Perbelanjaan Secara Berhemat Bagi Mengawal Perbelanjaan Awam Kerajaan Sarawak has been issued to all State Ministries, Departments, Local Authorities, Statutory Bodies and Government Linked Companies.
70. This Circular is to instil financial discipline and provide clear guidelines for expenditures amongst others, overtime claims, official duties travel, asset management, utility usage and office supplies, management of meetings, event management, and implementation of development projects.
71. Expenditures should be reasonable and prudent so that the distribution of resources can be optimized and managed more efficiently and effectively without compromising on the delivery of public services. Compliance with this circular is critical in preventing unnecessary and extravagant expenditures by government machineries.
72. In this regard, I would like to assure this august House that the Sarawak Government is committed and will continue to put in place strategic measures aimed at strengthening financial discipline and management in all aspects. With this commitment, I thus urge all Controlling Officers to also demonstrate greater accountability, caution, and prudence in the spending of public funds.
73. As provided under the Financial Procedure Act 1957 (Revised 1972) and Treasury Instructions, Controlling Officers must acknowledge that they are responsible and accountable for the management of financial resources allocated to them, which must be managed efficiently and effectively.
74. With a collective commitment to prudent financial practices, we will be able to sustain our financial health and equip Sarawak for any eventuality.
Tuan Speaker,
PUBLIC ASSET MANAGEMENT
75. Public asset management plays a pivotal role in ensuring the efficient utilization and maintenance of resources, enhancing service delivery, and promoting the long-term sustainability of an organization. Proper asset management, in compliance with regulatory requirements, would facilitate financial transparency and risk mitigation.
76. We have undertaken several key initiatives on public asset management improvements:
i) Issuance of the Dasar Pengurusan Aset Kerajaan which serves as a guide for all State Ministries, Departments and Agencies. Under this policy guidelines, Manual Pengurusan Aset Menyeluruh has been published, and several related circulars have been issued, outlining principles, strategies, and best practices to ensure effective asset management;
ii) Implementation of Integrated Asset Management System (IAMS) in 2023, which has streamlined the online processes of asset tracking, maintenance, and
disposal, leading to cost-savings and operational efficiency;
iii) Implementation of Asset Management Competency training to train the appointed officers on asset lifecycle management and risk assessment; and
iv) Establishment of Pasukan lnspektorat Pengurusan Aset to carry out scheduled inspections on Government agencies’ asset management protocols and identified areas for improvement.
Tuan Speaker,
STRENGTHENING PROCUREMENT INITIATIVES
Enhancing Unit Pendaftaran Kontraktor dan Juruperunding (UPKJ) Registration
77. We are committed to advancing procurement excellence through various strategic initiatives. Among others, the gazettement of the Financial Procedure (Registration of Contractors and Consultants) Instruction, 2024 and The Fees (Registration of Contractors and Consultants) Order, 2024 on 25th March 2024 with the following objectives:
i) Re-alignment of class of registration and financial limits for works, and mechanical categories in accordance with CIDB’s grade and financial limits.
ii) Imposition of registration fees for consultants in line with Ministry of Finance Malaysia’s practice; and
iii) Broadening the scope of disciplinary actions to include Warning and Blacklist to contractors and consultants who have defaulted in performing any contract.
Bumiputera Contractors Development Programme
78. Starting this year, we are implementing the Program Kontraktor Berdaya Saing (PKBS) to increase the participation of Bumiputera contractors In government projects through competitive bidding. This programme also aimed at building a pool of capable, competent, and resilient contractors that eventually will grow and able to compete in the open market.
79. Under PKBS programme, to date, a total of 350 participants have been selected throughout Sarawak to undergo a 10-day training programme to strengthen their knowledge and competencies in construction activities and procurement processes. Upon completion of their training, they will be given an opportunity to participate in selective tender in undertaking Government projects with value ranging from RM200,000 to RM2.5 million.
Tuan Speaker,
80. To further strengthen the capability of our Bumiputera contractors and suppliers and enhance their participation in the economy, we will continue to collaborate with other relevant agencies/stakeholders such as Sarawak Economic Development Corporation (SEDC), Sarawak Timber Industry Development Corporation (STIDC) and Construction Industry Development Board (CIDB) Sarawak through the implementation of the following programmes:
i) Program Peningkatan Usahawan Bumiputera (PUTERA). As of April 2024, 256 Bumiputera contractors and suppliers have received machineries and equipment amounting to RM1.4 million.
ii) Pusat lnkubator dan Bimbingan Usahawan (PIBU). As of April 2024, 23 PIBU are currently operating throughout Sarawak with a total of 5,889 participants.
iii) Program Skim Pembiayaan Kontraktor Kecil Bumiputera (SPKB). As of April 2024, a total of RM1.4 million financial assistance has been disbursed to the contractors under this scheme.
iv) Program Pembangunan Vendor Perabot Bumiputera through collaboration with JKR Sarawak and STIDC. As of April 2024, 32 Bumiputera furniture vendors have been appointed by STIDC for the supply of furniture to Government offices with a total contract value of RM5 million per year.
81. In addition, the training and development programme for Bumiputera contractors and suppliers will continue to be conducted covering aspects of competency, generic and online courses. As of April 2024, nine (9) series of training programmes have been conducted which have benefited 300 participants.
82. Dasar Penyertaan Kontraktor Bumiputera Dalam Perolehan Kerja/Projek Pembangunan Yang Menggunakan Peruntukan Kerajaan Negeri was issued last year. In the first quarter of 2024, the percentage of works awarded was recorded at 77.2 percent amounting to RM497.0 million from the total amount of RM644.0 million allocated to Bumiputera.
Sarawak e-Procurement System
83.We are embarking on the implementation of e-Procurement System whereby procurement exercise will be conducted digitally to enhance efficiency, effectiveness, and transparency of the government procurement processes. The development of the system is divided into three (3) stages.
i) Stage 1, the development of e-Direct Purchase module has been completed and will be rolled out by year end.
ii) Stage 2, development of e-Quotation module is ongoing and has achieved 72 percent completion.
iii) Stage 3, development of e-Tender module will be implemented upon completion of Stage 2.
84. The Government’s digital procurement initiative aims at elevating the procurement regime towards international standards while at the same time ensuring a seamless and innovative procurement ecosystem in Sarawak.
Tuan Speaker,
GOOD GOVERNANCE AND PRUDENT FINANCIAL MANAGEMENT
85. We have always upheld and maintained good governance practices to achieve and sustain our sound financial position. As I have mentioned in the Dewan Undangan Negeri sitting in November last year, Sarawak was accorded with a clean certificate, an unqualified report for its financial account for the year ended 31st December 2022 by the Auditor General of Malaysia. With this, Sarawak has earned 21 consecutive years of clean records for its financial statements.
86. On the credit ratings for Sarawak, Moody’s and Standard & Poor’s have reaffirmed the State ratings at A3 and A- with Stable Outlook, respectively, while Rating Agency Malaysia (RAM) has reaffirmed Sarawak with a credit rating of AAA. These assigned ratings reflect sound financial performance and prudent budgetary practices by the State in managing its financial affairs.
87. In this respect, I would like to thank all Sarawak civil servants for their unwavering commitment to exemplary financial management and governance. I assure this august House that my Ministry remains dedicated to upholding the highest standards of fiscal responsibility. We will continue to adopt international best practices and leverage digital technologies to enhance our operations. Additionally, we are committed to further strengthening the professionalism and competency of our officers, ensuring that they are equipped to meet the challenges of today and tomorrow.
Tuan Speaker,
ISSUES RAISED BY AHLI-AHLI YANG BERHORMAT
88. Over the last few days, Ahli-Ahli Yang Berhormat have debated and highlighted various issues and challenges that we face in our continuous efforts to develop and transform Sarawak.
89. In response to the issue raised by Ahli Yang Berhormat for Bawang Assan in respect of Federal grants to Sarawak, I wish to inform that negotiation on the formula for Special Grant is still on going. As an interim payment, Federal has decided to raise the annual Special Grant to Sarawak from RM16.0 million to RM300.0 million pending the finalization of the formula to be agreed upon between the Federal and Sarawak Governments.
90. We are committed to continue working closely with the Federal Government to secure more development funds to support our development agenda including the PCDS 2030, Sarawak Digital Economy Blueprint 2030, and Sarawak Green Energy initiatives. We are also leveraging on the Malaysia Agreement 1963 platform whereby the funding need of Sarawak is also being raised and deliberated, particularly for the development of basic infrastructure, utilities, telecommunication, border security, health, and education.
Tuan Speaker,
CONCLUSION
91. We, the GPS Government, will not waver in our efforts to ensure that Sarawak will continue to progress and scale greater height. We must strive to do better and remain resilient and competitive given the challenging and uncertain economic situation.
92. Akhir kata, saya ingin mengambil kesempatan ini untuk merakamkan ucapan terima kasih kepada semua Ahli-Ahli Yang Berhormat atas perkongsian idea dan cadangan yang bernas pada Persidangan Dewan Undangan Negeri Sarawak kali ini.
