Sarawak is rich with natural resources butdespite its economic growth at 4.3% is higher than Malaysia’s national average of 3.68%, the state’s own oil and gas activities contribute a small portion to its state’s total GDP of RM 142 billion
As a small state with 2.5 million population, it recorded a high GDP per capita of RM72,411, which was the fourth-highest in Malaysia and higher than the national average of RM54,612.
Whilst the state recorded high GDP numbers and revenue, Sarawakians remain relatively poor.
According to data published in the Sarawak Premier’s office, the monthly mean household gross income in Sarawak in the urban area in 2022 increased to RM7,744 from RM7,243 in 2019. While in the rural area, the monthly mean household gross income reached RM4,579 in 2022 compared to RM4,218 in 2019.
As comparison based on the data published by the Department of Statistics Malaysia (DOSM), Sarawak’s GDP grew by a small percentage of 1.2 per cent in 2023 and the average household income in the rural areas of Sarawak remains 50% below those living in Penang (RM8,267), Johor (RM8,517), Selangor (RM12,233) and Kuala Lumpur (RM13,325).
Sarawak’s GDP per capita fell 10% in 2023 compared to 2022 due to the decrease in oil and gas-related activities which contributed to Sarawak’s more subdued economic growth.
The Manufacturing sector contracted by 3.9 per cent, influenced by declines in Petroleum, chemical, rubber, and plastic products, particularly refined petroleum products.The Mining and quarrying sector also shrank by 1.0 per cent, following a decrease in the Natural gas (-1.1%) and Crude oil & condensate subsectors (-2.3%).
However, Petroleum Sarawak (PETROS) remains upbeat in growing its state revenue from oil and gas activities. But does it reflect the economic realities of the people and natives of Sarawak?
PETROS strong financial performance contributed a significant revenue of RM 1.79 billion to the state in 2022, and increase from RM 1.365 billion in 2021. Despite the increased profit before tax of MYR 833 million in 2022, it did not translate to higher household income through creation of new jobs for Sarawakians.
With Shell operating in Sarawak more than 100 years and together with national oil company PETRONAS, these two entities largely contributed to a significant portion of job creation for Sarawakians, business opportunities and increased tax revenues for the state.
Questions arising by the Sarawakians on the need to have a state-owned oil company.
Many are aware that the objective of the creation of PETROS differs greatly to the creation of Malaysia’s national oil company known as PETRONAS. Historically, the idea of creating PETRONAS stems from former Sarawak Chief Minister, Rahman Yakub in the late 60s which became the main engine of economic growth of Malaysia in the last 50 years.
According to research analysts, PETROS was recently created to serve the interest of the state, mainly driven to achieve political needs, but it may not necessarily or directly benefit Sarawakians.
A closer look at the trend showed the jobs creation and average income remain stagnant in Sarawak, depicting the economic realities and challenges that face the state from decades of corruption and leakages.
“Sarawak’s journey to greater autonomy by exercising more control of its natural gas supplyas the sole gas aggregator may not increase the household income of Sarawakians” said an economist from Kuching.
At the same time, PETROS’ exploration for carbon capture and storage (CCS) in Sarawak received strong support from the State Government, including approval for PETROS to use 1.3 million hectares of Miri-Bintulu waters for carbon storage to facilitate the carbon trading activities and to support Malaysia’s commitment to reduce greenhouse gases to net zero by 2025.
“The investment of PETROS in CCS and green energy have yet to seen direct economic benefits to the people” said a bank investment analyst.
According to the Department Statistics of Malaysia, Sarawak’s economy was mainly driven by the Services sector, which accounted for 38.3 per cent of the state’s GDP. The Manufacturing sector followed, contributing 26.5 per cent, while the Mining and Quarrying sector accounted for 20.8 per cent. Agriculture represented 10.6 per cent, and the Construction sector made up 3.6 per cent.
The concept of a rich-state-poor-people is evident in Sarawak despite decades of leadership as shown by the key economic indicators.
Under the current Sarawak Premier’s Abang Johari’s leadership, the state demands more under the Malaysia’s Agreement 1963, by exercising more control of its gas distribution from the Federal Government.
According to an analysis by RHB Investment bank, the national oil and gas company may stand to lose billions when Sarawak takes control as the sole aggregator of the gas supply via PETOS. More than 60% of the gas in Sarawak are currently managed by PETRONAS, and it may impact dividend payment to the Federal Government.
Beyond the MA63 demands and debate, the low-middle income trap in Sarawak remains the state’s greatest challenge despite receiving billions of Federal budget allocation, contribution and support each year.
As the state aspires to achieve a financially independent status, greater autonomy and control may not be the answer to a greater Malaysia. Creating projects will strong multiplier effects with greater transparency and the help of Peninsular Malaysian companies may assist Sarawak to achieve its independence.
