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Seeking clarification from Dr M
Published on: Sunday, July 22, 2018

CM Datuk Shafie Apdal refused to comment on the latest announcement by Prime Minister Dr Mahathir Mohamad on the distribution of profit to oil-producing states.

The PM's announcement was seen as contradicting his previous statement on the matter.

Shafie said he will defer an answer to the question on what he thought Mahathir meant, pending further discussion with the Prime Minister.

"I will tell you later. I have yet to get details (on the matter). I will talk to Tun Mahathir," he said.

On Thursday, Mahathir announced in Parliament that the Pakatan Harapan-led federal government would honour its promise to provide 20pc royalty to petroleum-producing states.

But later, he clarified the statement, saying the 20pc payment would be based on profit instead of royalty.

Shafie had welcomed Mahathir's first announcement, describing it as an indication of Mahathir's concern for Sabah rights.

The Parti Warisan Sabah president said securing the 20pc oil royalty was part of the party's manifesto and an election promise made together with its partners in Pakatan Harapan.


He said the announcement was a clear reflection that the new governments in Malaysia and Sabah were serious about fulfilling the aspirations of the people who wanted change.

In KUCHING, a Sarawak politician is unimpressed by the recent announcement made by Dr Mahathir that Sabah and Sarawak will definitely be given a 20pc oil royalty but the calculation will be based on profits instead of gross sales.

Speaking to FMT, Parti Pesaka Bumiputera Bersatu (PBB) Vice-President Karim Abdul Rahman Hamzah said Mahathir had got it all wrong and his announcement of 20pc royalties from profit will not go down well with the people in both the Bornean states.

"Royalty is a payment made to a legal owner of properties while profit is a financial benefit realised when revenue from a business activity exceeds the expenses, production cost and tax.

"In this case, Dr Mahathir is only trying to please oil-producing states by usage of the word 'royalty' and further saying that the royalty is increased to 20pc of profit," he said.

The Sarawak tourism, arts, culture and sports minister explained that there is a big difference between the existing deal Sabah and Sarawak have been receiving, which is 5pc of gross sales, and the one Mahathir proposed to give.

Royalty from the profits, he said, means the value after deducting production cost, taxes and other expenses.


The danger, he warned, is that production cost figures are subjective to many interpretations as this could include salaries of executives, travelling, entertainment cost and taxes, among others.

"Only after all these deductions will the 20pc stake come about. It might even be a zero amount or less than the 5pc cash payment given now.

"What is promised in the Pakatan Harapan election manifesto is 20pc royalty and not 5pc as it is now.

"This 20pc should be counted based on production, not profits," he said.

Meanwhile, federal de facto law minister Liew Vui Keong urged Petronas to explain the terminology "profit" and "royalty" to the people to avoid unnecessary confusion and anxiety.

"We have yet to hear from oil and gas experts.

"The value of 20pc from profit could be more, but I don't want to speculate about it yet," the Parti Warisan Sabah Permanent Chairman said.


At the same time, Liew urged all parties not to come to any conclusion until Petronas itself came out with an official statement on the issue.

What is important, he said, is that the government had agreed to give 20pc royalty to all oil-producing states.

"We will have to work on the dynamics to see how much Sabah will get out of the new deal.

"I don't have the figures on Petronas' profit yet. This is something that I will look into," he said.

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