RM2 billion oil ‘coup’ puts Sarawak opposition in further turmoil

When the tsunami of votes for Pakatan Harapan (PH) swept across the country in the 2018 election, the Barisan Nasional (BN) government in Sarawak at the time was one of the few that appeared to survive the onslaught.

Still, the ruling parties were aware of the groundswell sentiments created by the shocking defeat of the BN government and the need to shed all remnants of its former federal ally.

A month after the election, four ruling BN parties in the state decided to quit the coalition, forming instead Gabungan Parti Sarawak (GPS).

It was a much-needed change. Neighbouring Sabah had just voted in Warisan, which came to power on the back of strong rhetoric on restoring the state’s rights under the Malaysia Agreement 1963 (MA63), the document that created the federation.

GPS had been prepared to work with the PH government from the start, given the new ruling coalition’s election promise to quadruple Sarawak’s oil royalties.

But by 2019, after a series of statements from Putrajaya that giving Sarawak 20% royalties was not possible, the state appeared to give up hope.

When PH was in dire need of support during the 2020 power vacuum, it was a foregone conclusion that this would not come from GPS.

It used its powers under its Sales Tax Ordinance to impose a 5% sales tax on Petronas, the national oil company.

That added up to a whopping RM2 billion, more or less compensating for the broken promise of 20% royalties.

The PH government, through Petronas, resisted the payment until the end.

So when it was in dire need of support during the 2020 power vacuum, it was a foregone conclusion that this would not come from GPS whose 18 MPs allowed it to be the kingmaker in federal politics.

Instead, GPS wasted no time backing Muhyiddin Yassin as prime minister.

The support paid off. Just two months after Muhyiddin was sworn in, the national oil firm announced a ceasefire, agreeing to settle the RM2 billion in sales tax owed to Sarawak.

It was a win-win for both GPS and Muhyiddin’s Perikatan Nasional (PN) government.

The opposition’s dilemma

The Petronas settlement was a coup for opposition leaders who had made Sarawak’s oil rights a major issue in election campaigns.

Sarawak politics observer James Chin agrees, saying GPS has every advantage in any upcoming election.

For one, Chief Minister Abang Johari Openg has shown Sarawakians the benefits of being part of the PN government.

The prime minister has also created a special portfolio for Sabah and Sarawak directly under his office, to discuss, among others, MA63.

“Abang Jo has been quite successful as he managed to get Muhyiddin to ask Petronas to withdraw its appeal and pay RM2 billion of the oil and gas sales and tax to the Sarawak government,” Chin told MalaysiaNow recently.