ANY SABAH OIL ROYALTY SHOULD BE AT LEAST 20PC

Any Sabah oil royalty should be at least 20pc

September 01, 2012: SUCH is the nature of politics in a democracy that the interest of the voters is best served by an effective system of checks and balances in which no politicians or political party can abuse power at their whims and fancies or treat the nation's resources like their own.

They should and must be made accountable for their actions and decisions.

All the economic progressive countries in the world, without exception, have a 2-party system or in the case of more than 2 parties, a bi-partisan system like in UK. The bottom-line reality is that no political leaders, left to their own devises, can be trusted in the long run without a rigorous system to ensure their good behaviour.

Voters should be on "high alert" when they start to say "trust us, don't trust them" or "we are the best for you" without saying anything specific.

The worst saying is "do not politicise the issue" when they are in the business of politics.

Never ever give any political leader or party too much power as the saying "absolute power corrupts absolutely" has a very high degree of truth.

In Sabah, one of the outstanding benefits of an emerging 2-party system in Malaysia is the offer by PR [Pakatan Raykat] of 20pc of petroleum royalty.

Real or not, it is a very attractive proposition, compared to the present 5pc, to Sabahans.

I understand the oil producing provinces in Indonesia get 30pc.

I stand corrected on this as I am not sure what the Indonesian formula is.

BN Sarawak and Sabah have recently said that they are ready to undertake a review with the Federal Government. The situation as it stands now for BN is - BN cannot afford to offer less than 20pc.

This will not be viewed with favour by Sabahans. At 20pc, there will be no political mileage for BN as it will be seen as a copy cat.

BN, if it wants to regain the initiative on this issue, will have to better PR's offer.

Such healthy political competition between the two coalitions can work wonders for the interest of Sabahans.

BN may be constricted and restricted on the enhancement of the royalty offer as, one must remember, the Federal Budget is dependent on the contributions from Petronas as much as 45pc of the total budget.

This figure is likely to escalate further in view of the softening of the global economy.

The other major considerations for Sabahans to bear in mind are that our oil and gas resources are finite and that Malaysia, according to IEA [International Energy Agency of United Nation, will become a net importer by 2017.

The question should be that come 2017, can Malaysia [irrespective if BN or PR in power] afford to pay 20pc or 25pc to Sabah when it has become a net importer, meaning that it has to pay international prices for oil and gas for our import?

Just as important is for BN Sabah and PR Sabah to tell Sabahans their plans for this windfall.

This is not the first time that Sabahans, because of ineffectual and/or corrupt political leaders, have seen plenty of money [like the timber boom or the current oil palm skyrocket prices] but little benefits have been translated into $ in their pockets. BN and PR must give us their respective plans, don't just talk only.

Why a well thought out plan is important? Imagine that it took about 10 years for CM Datuk Seri Musa Aman to rebuild the State's budget to the current level of about RM4 billion. Also imagine that Sabah will become the largest oil and gas producing state in 3 to 4 years.

My layman estimation is that Sabah, on the basis of 20pc, should be getting between RM10 billion to RM15 billion of royalty a year.

My next invitation for your imagination is that this amount can reach RM20b a year if the royalty is 25pc.

The sums we are talking about are several times more than the current state budget.

My last invitation for your imagination is that the state budget by then, with the injection of a much bigger royalty [20pc or 25pc] and expected investments in oil and gas, may balloon to RM40 billion to RM50 billion.

Sabah can have the biggest state budget in the country - bigger than even Selangor!

Sabahans must also ask the political leaders including those from the opposition what are they going to do with the current State Reserve of more than RM4 billion that Musa has accumulated during his tenure.

Why must Sabah have better quality political leadership and new directions in the planning and implementation for this expected huge influx of money from oil and gas royalty?

For the simple reasons that firstly Sabahans have lost control of our economy. Proactive and aggressive policies and actions must be taken, as a top priority, to correct this very serious economic anomaly.

We have become "foreigners" in our own economy - from hawker stalls, to auto workshop, to coffeeshops, to oil palm and there is real and present danger that we will have only a "token" stake in oil and gas.

Sabah not having a say and letting our gas be pumped to Sarawak for processing is a clear indication of this high unsatisfactory situation.

Secondly, our economy has so many leakages that it is like a sieve with large holes - very little wealth generated in Sabah and from our resources, stays within Sabah for the benefits of Sabahans.

Just look at the gambling/casino/4 digits business which saps out a few millions a day and the billions of profits the non-Sabahan oil palm companies have been enjoying each year.

Thirdly, very few quality jobs or economic opportunities are open for Sabahans.

Our young graduates view Sabah as the "last option" in terms of employment opportunities.

Parents are encouraging them not to return, to or leave Sabah for "greener pastures".

Fourthly, Sabah needs to explore and exploit the many economic opportunities available in the global economy, especially in the food industry. Most important of all, we must give meaning to the lives of the many poor and downtrodden Sabahans like the Chong family who have been unsuccessful in getting a PPRT house and squatting in the city or the family of the young boy who hung himself because of poverty.

Good political leadership can rectify most of the economic ailments that have plagued Sabah for a long time.

In all the aforementioned points, will Sabahans benefit in the real sense [again - not talk only]?

Will our future generations enjoy the financial windfall? We can!

The key lies in electing the best possible quality political leaders in the coming GE13 who possess integrity [a rare commodity], and sufficient intelligence and common sense [a very rare virtue among political leaders in Sabah] to conceptualise an "out of the box" forward looking economic plan and the capability to implement it effectively.

The reason is simple - we look for leaders with the necessary economic vision, who can handle a budget of RM40 billion to RMRM50 billion [about 1/3 of the present national budget].

This sort of unprecedented amount needs honest political leaders with some sophistication and a good heart [as rare as blue diamond!] if Sabahans were to reap the fullest benefits from the enhanced royalty payment.

We need to remind BN and PR that the quantum of royalty for our oil and gas and the plan of how this royalty payment will be used productively to benefit us will feature prominently in the minds of Sabahans when we go to the voting booths.

In the meantime, Sabahans should sit back, watch how the 2 party-system can work for us and see what other benefits that BN and PR can produce to convince us to give our votes to them.

By: John Lo