KUCHING: Sarawak’s bold move to impose a state sales tax on PETRONAS, which was later upheld by the court, has proven to be a defining turning point in strengthening the state’s financial standing.
Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg said that when he first took over the administration, Sarawak’s annual revenue stood at only about RM6 billion, with the bulk of it spent on civil service salaries, leaving little room for development.
“In the past, we only had about RM6 billion in revenue. Paying civil service salaries alone would use it up, and only a small portion remained for development,” he said at the GPS Convention 2026 at the Borneo Convention Centre Kuching (BCCK) here today (April 19).
Determined to increase the state’s revenue base, Abang Johari said he turned to the Federal Constitution and identified provisions that allowed Sarawak to implement a state sales tax.
Acting on this, he enforced the tax on PETRONAS despite initial resistance.
“PETRONAS did not agree and stated that Sarawak had no right to impose a sales tax. So, we brought the matter to court and defended our constitutional rights – and in the end, Sarawak won,” he said.
The five per cent tax has since generated an additional RM4 billion annually, raising Sarawak’s revenue to approximately RM14 billion.
“That is with only a five per cent tax. With this increase, we are now able to implement various development projects, even after facing challenges when we were previously in the opposition,” he added.
Abang Johari recalled that during that period, several infrastructure projects including bridge constructions were cancelled, and there were even concerns that Sarawak could face bankruptcy.
“Despite those challenges, not only did we avoid bankruptcy, but we also went on to implement those projects, including the construction of 22 bridges,” he said.
Abang Johari stressed that these efforts are ultimately aimed at securing a better future for the next generation, noting that the state leadership remains committed to upholding Sarawak’s rights as enshrined in the Constitution.
“This is for our children and grandchildren. At the very least, we have fulfilled our responsibility to future generations,” he said.
On the financial front, Abang Johari said Sarawak has also regained a foothold in the banking sector after acquiring a majority stake in Affin Bank – effectively restoring the state’s presence in commercial banking.
He noted that Sarawak had previously lost its banking institutions after local banks such as Hock Hua Bank and Bank Utama relocated to Kuala Lumpur.
“Many of our banks were moved to Kuala Lumpur, leaving us without one. Now, we have taken back control through our majority stake in Affin Bank,” he said.
The acquisition also carries strategic value, including ownership of assets within the Tun Razak Exchange (TRX), Malaysia’s financial hub.
In another key development, Abang Johari said Sarawak successfully took over Bintulu Port Holdings Bhd following tough negotiations over compensation.
He revealed that the initial demand of RM4.8 billion was deemed excessive compared to the asset value of about RM1.1 billion, before a final agreement was reached at a maximum of RM1.8 billion.
“After discussions with Prime Minister Datuk Seri Anwar Ibrahim, Transport Minister Anthony Loke and Deputy Premier Datuk Amar Douglas Uggah Embas, the port now belongs to the people of Sarawak,” he said.
