Monday 5 December 2016

Winding up speech: CM touches on Sarawak tranformation, devolution of power, oil and gas royalty and Najib's commitment



Chief Minister Tan Sri Adenan Satem's winding up speech at the state assembly on Nov 30, 2016
SARAWAK TRANSFORMATION: THE WAY FORWARD
• Sarawak has continued to strengthen economic resilience through various measures over the years. Moving forward, there are challenges to be addressed arising from the uncertainties in the global economy and the slowdown in the national economy.

The Prime Minister clearly shows that he is willing to discuss this matter with the State Government and to find solutions to resolve this issue. The State Government is not making a ‘U’ turn on this matter because we believe that Federal and State BN Governments being in the family can resolve this issue amicably between the parties concerned. Diplomacy is better than confrontation. This consultation approach is manifested through the Prime Minister’s regular visits to Sarawak and his approval of many projects during his visits. - Adenan Satem


Despite these challenges, we need to accelerate our economic growth especially in achieving our vision to become a high income and developed State by 2030. To achieve this vision, efforts are being carried out through our Socio-Economic Transformation Plan (SETP) to accelerate income growth and reduce income disparity among our people.


Under SETP, for the State to achieve a high income status by the year 2030, the economy needs to grow at 6.5 percent per annum. As I have mentioned earlier in my Budget Speech, our economic growth in 2015 was 3.7 percent and is expected to grow between 3.5 to 4.0 percent in 2016. This projected growth takes into consideration of the weak prices of our export commodities.

However, as the world economy is expected to recover in 2017, the State economy is projected to experience better growth of between 4.0 to 4.5 percent. The slower economic growth registered thus far calls for adjustments in our economic policy and this required some form of interventions in Government strategies and expenditure.

 For this reason, I have announced in the Budget Speech 2017 that the State Government is embarking on a deliberate transformation initiatives in our Development Plan. The main areas in our transformation agenda are Socio-Economic Transformation, Rural Transformation, and Performance and Service Delivery Transformation. We hope that our SETP supported by the transformation initiatives will put our economic growth back on track as projected.

 DEVOLUTION OF POWER
On 16th March 2014, two weeks after my appointment as Sarawak Chief Minister, I have emphasised that Sarawak's relationship with the Federal Government must be constitutionally correct.  In order to achieve this, the Sarawak BN Government at the State Legislative Assembly sitting on 8th December 2015 had sought and was given a mandate for the State Government to safeguard the constitutional rights and protection of the State in the interest of all Sarawakians.

The mandate given covered the aspirations of the people of Sarawak from the days before the formation of Malaysia as stipulated in the Cobbold Commission Report, Inter-Governmental Committee Report and Malaysia Agreement 1963.

 Pursuant to this, the Government through its officials has actively and carefully planned a structured course of action toward achieving this objective. This course of action involves 3 phases which are as follows:- (1) Administrative empowerment; (2) Encroachment of State's rights; and (3) Oil and Gas Royalty.

 On 21st January 2016, I had announced 13 provisions of administrative empowerment to be delegated to the State Government which were agreed upon during my meeting with the Right Honourable Prime Minister Datuk Patinggi Mohd Najib Tun Razak.

 The 13 provisions of administrative empowerment are as follows:-
(1) Sarawak Legal Officers are to be authorised by the Public Prosecutor under the Criminal Procedure Code to conduct prosecution for offences under the State Ordinances from the stage a person is charged in the lower court until the appeal stage. In light of the recent Devolution of Power exercise agreed between the Federal and State Governments, several officers of the State Attorney-General's Chambers have on 1st March 2016 been appointed as Deputy Public Prosecutors.


Since then a total of sixteen (16) forest cases have been approved for prosecution. Ten (10) cases have been duly charged in Court with four (4) cases have been successfully prosecuted and the remaining six (6) cases are pending for trial. Another six (6) cases are pending for charges to be filed in Court. Following the successful prosecutions, a total amount of RM77,719.60 in compensation was ordered by the Court to be paid to the State Government. This amount is over and above the fine imposed by the Court;

 (2) It is agreed for the delegation of power to the State officers to represent the Public Service Commission and the Education Service Commission in the appointment of officers to the Federal Civil Service, including teaching and medical services;

(3) Posts in Sarawak Immigration Department will be increased to improve the enforcement functions in the State with an increase of 100 new posts, with full deployment by the end of next month. As of today, out of 100 new posts, 99 posts have been filled;

 (4) The ratio of Sarawak-born teachers serving in Sarawak will be increased to 90 percent of the total number of teachers in Sarawak by 2018. To ensure that this target is achieved, temporary teachers from the open market will be considered from time to time and obtain their Diploma in Education while teaching. As of today, out of the total number of 42,235 teachers in Sarawak, 37,921 of them are Sarawak-born teachers, which is about 89.8 percent of the total number of teachers in Sarawak;

(5) Traffic warden power for Sarawak Local Authorities will be given to the Miri City Council, apart from Kuching North City Hall and Kuching South City Council;

(6) The Sarawak State Government will be consulted before an application for a Deep Sea Fishing Permit is forwarded to the Deep Sea Permit Evaluation Committee for consideration. The Ministry of Agriculture and Rural Economy is the representative of the State Government in the Deep Sea Permit Evaluation Committee;

(7) The Sarawak State Government will be consulted in the drafting of Federal legislation which has bearing or impact to the Sarawak State Government, where provided by law. In this respect, the State Government was consulted on, amongst others Integrated Water Resources Management Bill and Amendment to the Gas Supply Act 2016;

(8) The planning of Federal development projects in Sarawak will be based on the priorities and strategic thrusts of the State Five-Year Development Plan. Implementation of the projects will be referred by the Federal Ministries to the State Government such as in determining the location of schools, hospitals and other development projects. This initiative is now being implemented;

(9) The Higher Education Ministry will take necessary measures to increase the number of student enrolment from among Sarawakians into medical degree programmes in public universities.
Sarawakians would be given a greater opportunity to enter foundation studies programmes in UNIMAS. In this respect, UNIMAS has been empowered to manage the intake of medical students to allocate the quota of 80 percent for Sarawak born students.

 (10) It is agreed that relevant areas that can be delegated will be identified for delegation of power of the Director General under Section 49 of the Environmental Quality Act 1974 to the State officers or departments. Both the State and Federal Governments have agreed on the matters to be delegated and are now in an advanced stage of such empowerment.

(11) Development of housing projects in Sarawak is to be implemented through a Joint Committee Meeting to ensure that State agencies are fully involved in the planning, implementation and monitoring aspects of these projects in Sarawak;

(12) It is agreed that the development of sports in Sarawak is jointly managed with the State Government. The Federal Youth and Sports Ministry is also in the process of enhancing the Sports Development Act, 1997 which is expected to be completed by the end of the year. Certain aspect of the Sport Development Act, 1997 is under review by the parties to look into the possibilities of enhancing the involvement of the State Government including the organisation of international/national sporting events; and

(13) It is agreed that the Sarawak Government will carry out all functions under the Social Welfare Department. All posts will be transferred to State Civil Service. The Federal Government will contribute 50 percent of the total costs incurred as decided by the National Finance Council.  In this regard, the State Cabinet will be deliberating and making a decision on the terms and conditions of these initiatives in the coming months.

These 13 provisions of administrative empowerment are progressively fulfilled by the Federal Government and we will continue to seek more empowerment to the State which can bring better benefits including areas related to tourism and education. 
 
The second phase involves the priorities subject matter relating to:- (1) Finance (a) Financial Review under Article 112D of the Federal Constitution; (b) Import Duty and Excise Duty on Petroleum Products; and (c) Federal Financial Obligation for Expenditure in Concurrent List.

(2) Oil Exploration, Mining and Gas (a) Minerals, Oil and Oilfields; and (b) Distribution of Gas.

 (3) Land and Revenue from Land Stamp Duties Chargeable on Instruments Prescribed by Land Code for Transfer, Charge and Sublease.  These issues are at an advanced stage of negotiation by the State and Federal officers in the Technical Committee set up to look into these priorities issues. Negotiations are on-going with the relevant parties.

 As the negotiations have yet to be finalised, the details of the meetings cannot be made public as yet. However, I wish to inform this august House that the next meeting of the Technical Committee will be held tomorrow, 1st December 2016.Matters not in the priority list will be dealt with after the issues in the priority list have been dealt with.

UPDATE ON THE OIL ROYALTY NEGOTIATION
The oil market has shown signs that are heading towards a more balance situation, despite continuing volatility and challenges. The World Bank’s Commodity Markets Outlook, October 2016 projected crude oil prices are to average at USD43 per barrel in 2016, a decline of 15 percent from last year, and average at USD55 per barrel in 2017.

However, the forecast assumes OPEC will succeed in limiting global production, and that U.S. production will flatten out next year.  Despite the uncertainty in the oil market, our negotiation on the request for the increase of oil royalty from 5 percent to 20 percent with the Federal Government and PETRONAS will continue.

In fact, we have made some progress in the following five (5) key areas of negotiation with PETRONAS: (1) Natural Gas Supply for both Power and NonPower Sectors; (2) Equity and Royalty; (3) Contracts and Business Opportunities; (4) Corporate Social Responsibility; and (5) Human Resource, Education and Technical Trainings.

 On the natural gas supply, PETRONAS has signed five (5) agreements to support the development of power and petrochemical industry in the State: (1) Principle Agreement with the Government of Sarawak on the Supply of 450 million standard cubic feet per day of natural gas for the power and non-power sectors in the State of Sarawak on 3rd April 2016;;
(2) Gas Sales Agreement with Sarawak Energy Berhad to supply 100 million standard cubic feet per day of natural gas for Tanjung Kidurong Power Plant on 3rd April 2016;
(3) Memorandum of Understanding with the Government of Sarawak to conduct a Joint Study for Sarawak Petrochemical Master Plan on 3rd April 2016;
 (4) Heads of Agreement with HUCHEMS for the supply of 58 million standard cubic feet per day of natural gas to HUCHEMS' petrochemical complex on 11th November 2016; and
(5) Memorandum of Understanding with Yayasan Hartanah Bumiputera Sarawak to jointly conduct a Pre-Feasibility Study for a Proposed Methanol Plant Projectin Bintulu on 11th November 2016.

Through these agreements, PETRONAS has committed to supply 450 million standard cubic feet per day of natural gas to Sarawak for the power and non-power sectors development in the State. We will continue to negotiate for the supply of more natural gas from PETRONAS.

 The availability of natural gas in Sarawak will attract more petrochemical industries to invest especially in Bintulu. This will support our industrialisation strategy to transform Bintulu to be the leading petrochemical hub in Malaysia.  We believe that the Sarawak Petrochemical Master Plan will also help us to develop our petrochemical industries in a strategic way to benefit the State.

The State Government is also in active discussion with PETRONAS on the details of Shareholders Agreements on the 10 percent equity in the MLNG Plant Train 9. We are also working with PETRONAS for more equity in MLNG 2 Plant.

Let me emphasise here that the State’s equity in MLNG projects is our privilege as not anybody can participate in the projects. We are also pursuing to have more contracts to be given to our Sarawak companies.

In this regard, PETRONAS has committed a baseline value of RM2.1 billion worth of contracts annually to be awarded to Sarawak companies. Since 2013, PETRONAS has already spent RM14.8 billion worth of contracts to Sarawak companies.

I would also like to inform that the number of Sarawak licensed or registered companies with PETRONAS have increased from 314 in 2013 to 396 in 2016. We will continue to negotiate with PETRONAS to enhance the participation of Sarawak companies in oil and gas industry.

 For Corporate Social Responsibility, PETRONAS is committed to spend RM50 million over 5 years from 2015 until 2019 for 10 projects. Currently eight (8) projects have started and are ongoing namely the Development of Community Centre, Sarawak Regatta, Contribution to NGOs, Mobile CSR, Penan Pre-School, Emergency Aids and PETRONAS Marine Conservation.

 Another two (2) projects will start soon namely PETROSAINS Playsmart and Rest and Recreation Areas.

In the area of human resource, education and technical trainings, PETRONAS will continue to intensify education and human capital development effortsin Sarawak.

PETRONAS is expected to spend RM465 million, exceeding the budget of RM420 million meant for 5 years from 2015 until 2019 on:
(1) Capital expenditure for the construction of new MRSM Bintulu;
(2) Implementation of Asrama Desa projects; and
(3) Educational sponsors and capacity building for students.

The following are the PETRONAS contribution in education and human capital development for Sarawakians:
(1) 680 students sponsored under PETRONAS Education Sponsorship Program to pursue tertiary education since 2003;
(2) 1,054 students sponsored under Program Sentuhan Ilmu PETRONAS to drive academic excellence since 2003;
(3) 1,008 trainees given the technical skill training support under PETRONAS VISTA programme since 2007;
(4) 47 students participated in Graduate Employment Enhancement Scheme since 2011;
(5) 687 students graduated from University Teknologi PETRONAS since 2003;
(6) 1,945 trainees sponsored at Institut Teknologi Petroleum PETRONAS (INSTEP) since 2007; and
(7) 95 students sponsored at Akademi Laut Malaysia.

 I would like to inform this august House that currently there are 3,880 Sarawakians or 75 percent of the total workforce being employed by PETRONAS for its Sarawak operation covering both upstream and downstream activities.

 However, after our negotiation with PETRONAS to increase the number of Sarawakians working with PETRONAS, they have charted a Roadmap to recruit and develop more Sarawakians to achieve the targeted job level of 85 percent for Sarawakians by 2020.

The Localisation Plan was developed to increase the numbers of qualified Sarawakians in PETRONAS through Structured Succession Planning and New Recruitment through advertisement.

The Structured Succession Planning of Sarawakians filling up positions on Non-Sarawakians is on-going since September 2016.  For the new recruitment, 192 vacancies (meant for Sarawakians) were advertised in the local newspapers namely, Utusan Borneo, Borneo Post and New Sarawak Tribune on 22nd October 2016.

 As of 8th November 2016, PETRONAS has received 10,416 applications (including non-Sarawakians) and shortlisting is in process. Efforts are also in place to further up skill and create future qualified Sarawakians leaders. Placement of Sarawakians at Universiti Teknologi PETRONAS and Institut Teknologi Petroleum PETRONAS will continue to be done based on merit.

 PETRONAS will continue to expand outreach programme to encourage more Sarawakian students to enrol in Universiti Teknologi PETRONAS. PETRONAS will also continue to support technical training programmes in Sarawak via PETRONAS Vocational Institution Sponsorship and Training Assistance Programme which include the funding of technical programmes, consumable and Training of Trainers as well as sponsorship of trainees.

PRIME MINISTER COMMITMENT TO SARAWAK
The State Government has decided not to proceed on the motion to Article 1(2) of the Federal Constitution which categorised Sarawak as one of the thirteen (13) states in Malaysia.

The amended Article 1(2) is perceived as not in the spirit behind Inter-Governmental Committee Report and the Malaysia Agreement which was clearly reflected in the original wordings of that Article. That Article, before its amendments clearly provides that the Federation of Malaysia consisted of:
(1) The States of the federation of Malaya;
(2) The States of Sabah and Sarawak; and
(3) Singapore.

The Prime Minister has announced that he is willing to discuss with Sarawak and Sabah on any matters related to the misinterpretations and misunderstandings to the Malaysia Agreement 1963.

On this note, the Prime Minister clearly shows that he is willing to discuss this matter with the State Government and to find solutions to resolve this issue. The State Government is not making a ‘U’ turn on this matter because we believe that Federal and State BN Governments being in the family can resolve this issue amicably between the parties concerned. Diplomacy is better than confrontation. This consultation approach is manifested through the Prime Minister’s regular visits to Sarawak and his approval of many projects during his visits.

As I have always mentioned in the past, we are fortunate to have Datuk Patinggi Mohd Najib Tun Razak, a caring Prime Minister who has frequently visited Sarawak since he became the Prime Minister. Undeniably, this shows that he cares a lot for the wellbeing of the people in the State.  It also exemplifies his great concern on the needs to accelerate the provision of basic infrastructure and social amenities especially in the rural areas.

As such, we always welcome his visits to the State. Being a compassionate and generous Prime Minister, his walkabout to the State does not come empty handed. Instead, many basic infrastructure and social amenities projects were approved during his visits cum meeting the people sessions despite the economic slowdown faced by the country in the last couple of years.

The announcement of many touch point projects during his visits to the State was made possible due to the close rapport and cordial relationship between the State and Federal Governments.

In this respect, we strongly believe that consultative rather than confrontational approach is the best way for the State to engage constructively with the Federal Government.

 Indeed, this approach has augured well for both parties as manifested through the significant number of projects approved during the Prime Minister walkabout to the State. During the recently concluded State Election, YAB Prime Minister has approved 498 walkabout projects with an allocation totalling RM2.601 billion for the State.

I am pleased to inform this august House that as at 31st October 2016, 286 projects or 57 percent of the total projects had been completed while the remaining projects are still at the various stages of implementation.

The completion of these projects undoubtedly has significant impact on the livelihood of the rakyat especially those residing in the rural areas. A case in point is the completion of the Batang Sadong Bridge costing RM211.3 million in Samarahan Division. This project has benefited thousands of people living in the coastal settlements within the areas. Towns and settlements along the coastal areas are now well connected. Hence, the travelling time between Sebuyau and the surrounding towns has been greatly shortened.

In addition, the farmers and fishermen in the areas are now able to market directly their produce to the nearest towns.  Of significant to note is that this bridge acts as an enabler to provide the road connectivity and to fast-track the development within this area.

With the existence of better connectivity, the private sector is expected to actively participate in the opening up of more areas for development notably in commercial plantation, agriculture, aquaculture and fisheries as well as related agro-based industries.

All these business activities will provide more and better employment opportunities to the local communities. It is envisaged that with the provision of better infrastructure and good income will improve the quality of life of the communities in this area.

The Pan Borneo project, a mega project for Sarawak that was approved by the Prime Minister is progressing well. All the 11 packages from Telok Melano, Lundu to Merapok, Lawas have been awarded to the successful contractors. With a total distance of 1,089 kilometres, the project when completed in 2020 will provide a comfortable and toll free road journey. The travel time across Sarawak will also be shortened drastically.

 As I have mentioned before, this project will bring multiplier effects on the State economy through greater mobility of people and goods and opening up of more areas for development. The project has created job opportunities for 75 local consultants, 11 main contractors and 36 subcontractors as well as generating more employment opportunities for Sarawakians.

In order to ensure the successfully completion of this project and to benefit the rakyat, the State Government is working very closely with the Federal Government. In reciprocating the kind heartedness and generosity of YAB Prime Minister, I would like to express our thanks and heartfelt appreciation to him and the Federal Government for approving these people-centric and rural focus projects during his walkabout in Sarawak.These projects have considerably benefited the rakyat especially the rural communities. 

For this reason, we hope that our YAB Prime Minister will continue to visit us in the future and to announce more programmes and projects for the benefit of the rakyat in Sarawak.

PROGRESS ON 53 PRINCIPLES AND ACTIONS
I have made many announcements in respect to the 53 Principles and Actions before the last State election. These Principles and Actions are not just empty promises but sincere efforts by the BN Government to safeguard the interest of the rakyat as well as to lighten the burden of the people.

 I am pleased to inform that all these Principles and Actions have already been implemented except for several items under the Devolution of Power and PETRONAS commitment as I have explained earlier that are still at the various levels of negotiation with the Federal Government and PETRONAS. It is obvious that the rakyat have benefited from the various initiatives that are being implemented.

POLITICAL SCENARIO
 Before I conclude my speech, let me share some findings on the people support in the last State Election. In terms of popular votes, there is an increased support for BN from 55.4 percent in the Tenth State Election (PRN10) to 62.2 percent in the Eleventh State Election (PRN11).

 In contrast, the popular votes for the oppositions (PKR and DAP) have decreased from 37.4 percent in PRN10 to 29.0 percent in PRN11. The people support is translated into an overwhelming victory by BN in winning 72 out of 82 State Constituencies contested in PRN11.

The rakyat have made their choice and we, the BN Government being a caring and responsible Government is duty bound to deliver all the promises made in the last election. We are committed to discharge our responsibilities to plan for the posterity of Sarawak and to look after the wellbeing of the rakyat.

This is the reason why we have fulfilled the 53 Principles and Actions to benefit the rakyat. We are implementing development policies and strategies through our SETP and Transformation Initiatives for the economic prosperity of the State and the livelihood of our people.

Therefore, our programmes and projects are people-centric and focusing on the rural areas.


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