Kota Kinabalu: OIL prices are largely dictated by international factors beyond local control and do not necessarily translate into higher revenue, said Deputy Chief Minister Datuk Seri Masidi Manjun.
“Sometimes we think when oil prices rise, our revenue will increase, but that is not true because many other elements determine and affect the returns we receive,” he said in response to a supplementary question by Datuk Junz Wong (Warisan - Tanjung Aru).
Masidi, who is also State Finance Minister, said among the key factors is production, which may decline or face export constraints during conflicts such as war, thereby reducing the volume of oil available in the international market.
He said exchange rates also play a significant role, noting that a stronger ringgit is a “double-edged sword” as it reduces import costs but also lowers oil revenue when converted from US dollars.
To another supplementary question by Wong on whether Sabah could negotiate exemptions from fuel price increases, Masidi said the matter could be raised in future discussions.
Earlier, in response to the original question by Wong, Assistant Finance Minister Datuk Ishak Ayub said the Middle East conflict since early March had significantly driven up global oil prices.
He said based on data from the US Energy Information Administration, the average Brent crude price rose from US$71 per barrel in February this year to US$103 per barrel in March, an increase of about 45.5 per cent.
“As at Friday (April 24), at market close, the Brent crude price stood at US$106 per barrel,” he said.
However, Ishak said the increase did not fully translate into higher State revenue due to the stronger ringgit against the US dollar, with the exchange rate at RM3.97 at market close on April 24.
He said under Section 14 of the State Sales Tax Enactment 1998, State Sales Tax (SST) payments for the taxable periods of March and April this year are due on April 28 and May 28, respectively, and the actual impact on revenue will only be known upon receipt.
“Based on initial projections using current assumptions on sales volume, oil prices, exchange rates and a five per cent tax rate, SST collection from Petronas and its subsidiaries for March to April this year is estimated at RM96.5 million,” he said.
He said this reflects an estimated increase of RM8.9 million or 23 per cent per month compared to February this year, although the figure remains subject to market changes.
Ishak said despite the sharp rise in oil prices, the increase in State revenue is more moderate, indicating that tax income depends not only on price but also on exchange rates, production levels and market conditions.
He added that the global oil market remains volatile and the projections are only preliminary as market dynamics can change rapidly.
