KUCHING: Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg has outlined Sarawak’s plans and strategies to propel the state toward achieving prosperity by 2030.
He shared his insights during a recent interview on TVS, titled ‘2025 Sarawak Post-Budget Special Interview’, which aired on Wednesday (Dec 11).
The session was moderated by renowned economists from Universiti Malaya (UM) and a member of the National Council of Professors, Dr Muhammad Asri Mohd Ali.
In the interview, Abang Johari delved into various topics, including the 2025 State Budget, Sarawak’s transition to a green economy, efforts to diversify the economy, initiatives to support low-income groups, and the role of Petroleum Sarawak Berhad (Petros) in the oil and gas industry.
Below is full excerpt of the interview:
Moderator: With us, is our guest of honour, the Premier of Sarawak, Yang Amat Berhormat Datuk Patinggi Tan Sri Abang Haji Johari Tun Haji Openg. Welcome, Yang Amat Berbahagia Datuk Patinggi.
We extend our heartfelt thanks for the Premier’s presence and willingness to share insights and explanations regarding the issue of the budget, which has recently gone somewhat viral. This is the first time, I believe, that a state budget has received responses from two former Prime Ministers and two Cabinet Ministers.
If we delve a little into your administration, Tan Sri, there seems to have been a dynamic shift in the economy over the past seven years.
And this is reflected in the increase in Sarawak’s annual budget. If we look at the recent 2025 budget, it is among the highest in history—not only in Sarawak’s history but also surpassing the budgets of other states.
Specifically, if we look at Sarawak’s revenue seven years ago, it was at RM5 billion. It then increased to RM14 billion, and the recent budget involves an allocation of RM15.8 billion.
It is among the highest so far in Sarawak’s history and at the Malaysian level as well. So, in that context, my first question is, if Tan Sri could share your thoughts.
How is Sarawak able to accumulate or come up with such high expenditure, allocation compared to other states? And in increasing Sarawak’s revenue over the years, if you could share, so that we can all learn from the Premier’s experience in managing Sarawak’s economy.
Premier: Thank you very much for the invitation to jointly examine the impact of the Post Covid-19 budget and the post budget for the years 2020-2025. It is indeed true that over the past seven years, we have been able to increase the state’s revenue, and that is why we have the funds to further boost our economic activities. And as a result, we can provide better income for Sarawak.
What actually happened was when I took over the leadership of the state, I conducted a study and analysis on the foundation of our economy. Initially, it was very dependent on palm oil and timber (industry), where I saw that we could not solely rely on those sectors, but we must diversify the base, that is, diversification of the economic base.
That is why I feel that our economy should move towards new methods, including digitisation, which can increase the value of our economy and be more efficient in terms of our fundamental management.
The second aspect was looking at how we could increase revenue through several legislations available in the state of Sarawak. That is why I conducted a study on where Sarawak could implement a sales tax that had never been implemented before. I saw this as one of the foundations for increasing our income, so I implemented the sales tax, which is only allocated for Sarawak and Sabah.
This is one of the agreements when we formed Malaysia in our constitution. And that is why the first thing I implemented was to increase the revenue from oil and gas. I imposed a 5 per cent tax that yields a return or income of around RM2.5 billion to RM3 billion, depending on the market price of oil and gas.
Another thing I did was also to impose the sales tax on other commodities that we export. One of them is palm oil. We imposed what is called the Oil Palm Levy. This has also generated revenue for Sarawak.
Thirdly, is that we produce hydro energy, which is based on water. So, we have royalties from water that provide returns, incomes, and the other is the service tax.
Initially, we had revenue between RM5 billion and RM6 billion. But when I diversified our economic structure, it increased up to this year. We achieved RM14 billion in revenue, which is the highest, and we have a budget for 2025 amounting to RM15.8 billion.
You know, we must be prudent in managing our economy. That is why our revenue will increase.
Moderator: Thank you, Premier, for the explanation. So, the key lies in economic diversification, tax reforms and the Premier’s boldness in engaging with the new energy sector, namely hydrogen.
Looking at this, Premier has also set a target for 2030 to achieve a prosperous developed state. How does this budget align with achieving that goal?
Premier: Actually, you must have specific targets; we have a direction for managing the economy.
After the challenges of Covid-19, I brought together all stakeholders, including the private sector and non-governmental organisations (NGOs), to find ways to improve our economy, which was impacted by Covid-19. As a result of these findings and discussions, we developed the Sarawak Post Covid-19 Development Strategy (PCDS), which is geared towards 2030.
At that time, the Gross Domestic Product (GDP) was approximately RM140 billion, and I aim for it to reach around RM280 billion by 2030. This is indeed an ambitious target, but with such goals, we have set a direction and identified the sectors that can boost our GDP.
One of the sectors is energy, and Alhamdullilah we have renewable energy which is from water. After that, we also utilise our strength in solar energy, which we can generate from floating solar panels at our dams.
The third is through the use of our gas, particularly in gas turbines. With this renewable energy, of which is very important in addressing climate change, I believe it can attract investments and, of course, produce export commodities while generating revenue for the state.
In addition, it is in terms of human resources. We put emphasis on the education sector, which must be driven by the latest technology to deliver high productivity to Sarawak’s economic foundation.
So, I feel that by 2030, although we have set high targets, we have a process and several sectors that we need to expand.
An important aspect of this is infrastructure. That is why we allocate significant expenditure to the infrastructure sector, including roads, electricity and water supply, and coastal roads, of which can provide access to areas for development.
Moderator: Considering that Premier has touched on renewable energy, hydro and green economy, these are all trends expected to become global players for Sarawak in the future.
I see Premier as being quite bold compared to other leaders, including the federal government, in exploring all new revenue sources. This is because we know that industries like oil and gas are in a declining, sunset era. So in this context, many are wondering how Premier plans to achieve this.
Will it be through investments, attracting foreign investors, or will the Sarawak government itself establish companies and engage in this sector?
Premier: We see the strength we have because this climate change issue is serious, and the whole world is looking for solutions for energy that can replace fossil fuels.
It started from the (conference) Kyoto, then in Paris, in Dubai, and finally in Baku, Azerbaijan. When I saw this, I felt that Sarawak needed to find a more sustainable and lasting energy alternative.
Before I became Chief Minister (Premier), I had conducted research on hydrogen and was involved with Linde, believing that our abundant water resources could be split into hydrogen and oxygen molecules.
Hydrogen can become a renewable energy source, and that is why, after I took over the administration from the late Tan Sri Adenan Satem, I initially started this effort.
Even though the cost was high, which at that time was around 60 per kilowatt-hour for 1kg of hydrogen, I brought in a proto-hydrogen production line and Sarawak Energy Berhad (SEB). That was the cost.
I am confident that with advanced technology from electrolysis, which is an essential element, the cost can decrease. I have conducted research with Petroliam Nasional Berhad (Petronas) regarding hydrogen production, and it seems that now it has decreased to 30 per kilowatt-hour for 1kg.
This means that the cost will go down. I have already started producing hydrogen, and our public transport, the Autonomous Rapid Transit (ART), will use hydrogen, and this infrastructure is currently being developed.
Moderator: So, is this the first in the Southeast Asian region?
Premier: Yes, I see that we might be the first, but let’s look at energy generation compared to solar. Solar energy production costs were expensive 10 years ago but have now decreased by 80 per cent within the past decade.
According to projections by the International Energy Agency (IEA), due to new technological discoveries, hydrogen costs will decrease by 50 per cent by 2030, meaning hydrogen production will become cheaper.
We have water for hydrogen production, and we can also produce blue hydrogen from methane gas (CH4). If we extract the carbon, only the hydrogen molecule remains, making it blue hydrogen. Therefore, gas can also be a basis for producing renewable energy, and our economy will be hydrogen-based.
We have collaborated with Korea and Japan, which may face carbon emission issues and require this energy. So, we are cooperating, and God willing, between 2028 and 2029, we will produce hydrogen for export to Japan.
Thus, we will meet our domestic needs while simultaneously selling to neighbouring countries.
Moderator: If I may go deeper, is the Sarawak government investing in green technology companies or attracting major players in this field?
Premier: Yes, we are attracting them. For example, Japan’s Sumitomo, as the country also wants
to transition its energy sources because it is one of the nations that emits a lot of carbon due to its industrial activities.
So, they will have a carbon trading, carbon credits, and they need something that can produce hydrogen. They invest here, and we process it. Sarawak only takes a small equity stake, while the rest is for those who need hydrogen to invest. The same goes for Korea.
So, we feel that when developed countries switch from fossil fuels, oil may no longer hold value due to alternative energy sources. Since we have alternative energy, and if we can produce it at a reasonable cost, I believe the entire global economic structure will change.
Moderator: I believe Premier has established a foundation that can guide other states. When we talk about this technology, what comes to mind are high capital requirements and advanced expertise. So, the Premier’s approach seems safer by bringing them to invest here since Sarawak has the resources.
Premier: The important thing is the process and the technology because it will evolve and continue to change.
Moderator: In that context, besides investment, when we want to explore a new economy that requires high expertise, how will the 2025 budget, in terms of human capital, produce the right experts in line with Sarawak’s direction toward a green energy economy?
Premier: That is why I mentioned earlier that we need to strengthen our education policy. Sarawak has five universities.
They are private universities but owned by the Sarawak government. So, what we need is to emphasise Technical and Vocational Education and Training (TVET). It is very important.
We encourage students to take courses related to the new economic transition. That is why I provide them with incentives. Assistance is given to those currently studying, and we provide special aid.
We have many students in public universities in Malaysia. So, I provide a small living allowance or a special Sarawak student allowance of RM1,200 per person, expected to benefit 25,000 of our students nationwide.
Additionally, we also offer scholarships in specific fields related to this economic transition.
Looking ahead, by 2026, I have announced that the Sarawak government will provide free higher education to Sarawakian children pursuing further studies.
This means there will no longer be issues with funding. Anyone eligible and accepted into government-owned universities will be given the opportunity to study. These courses are related to science, accounting, and finance.
Perhaps because there are many new laws now, including legal studies, we are placing emphasis on that too.
By 2030 and beyond, we will have a skilled workforce capable of earning high wages or salaries.
This includes specialised jobs, even in agriculture where we use machinery, which will undoubtedly help us achieve our goal of increasing people’s income. We have now been recognised as a high-income state by the World Bank.
However, we also want to see an increase in the median income and household income of low-income earners. This must be achieved through education.
Moderator: Earlier, Premier, we saw how the education system is planned in line with the energy transition direction and efforts to increase Sarawak’s income. Returning to the recent budget, there was mention of children’s higher education. Can YAB explain the assistance provided to groups such as B40 and M40 in line with the recent budget theme of building future prosperity together?
Premier: Yes, we are currently facing the issue of the cost of living. That is why I see that in the 2025 budget, the B40 and M40 groups need to be helped. For that reason, my policy is that they must have food on the table.
So, we proposed a policy called the Sumbangan Keperluan Asas Sarawak (SKAS), which is an assistance scheme for the targeted group. However, the method is different. I will explain the process to the people, and it will not be in the form of cash.
What we provide is assistance through the S Pay Global’s account, and they can only use the funds to purchase basic food items such as rice, cooking oil, and other necessities.
Thus, the government will allocate aid through S Pay Global, and the amount will be deducted from the account. This means that every month, eligible individuals will have access to basic food supplies.
This will be done through our registered traders with S Pay Global, including grocery stores in villages. Assistance recipients will only need to go to the grocery stores, collect their items, and the government will pay through digital vouchers.
This means that basic food items, possibly worth between RM100 to RM200, will be covered by the government. Therefore, there will be no issue in providing food for families.
In addition, those involved will also have financial resources supported by the government. This assistance will benefit approximately 800,000 of our residents, with a special budget allocation of RM460 million. It is similar to other forms of aid.
Additionally, we are also providing an Endowment Fund, an assistance for senior citizens under the Department of Social Welfare (JKM), for which we have also allocated a special budget. Social security has already been given special funding.
Moderator: This policy, initiative is expected to provide relief to the B40 group?
Premier: We are using this method because sometimes if we give cash, it might be used for other things. I know that other countries like Singapore use this method.
We already have cashless payment methods through S Pay, and this will be expanded. The only thing we need to improve is digital connectivity. Therefore, we must allocate funds for rural areas to ensure connectivity. If connectivity is not available, assistance will be provided through the District Office.
Moderator: In that context, since we are talking about rural communities and related matters, there are many allocations outlined by Premier this time for developing rural infrastructure such as coastal roads, water supply, electricity, and so on. Can the Premier explain more about this infrastructure?
Premier: Our development allocation is RM10.8 billion, with RM6 billion specifically for rural areas, including the agricultural sector and rural road infrastructure.
We already have some infrastructure in place, but we want connecting roads that link longhouses and villages to our main roads. I believe that by 2030, the road network will be completed, including electricity and water supply.
That is why, from time to time, rural development is given a high allocation of around RM6 to RM8 billion because we have a budget of over RM15 billion, with about RM4 billion allocated for operations. Our usual formula is 70 per cent for development and 30 per cent for operations, with a significant focus on rural areas. We must improve basic infrastructure in rural areas.
Moderator: Premier: I will ask a somewhat controversial question that has been widely discussed until now. Particularly regarding the state government’s decision to designate Petros as the sole aggregator or distributor in the Liquefied Natural Gas (LNG) sector in Sarawak.
There are opinions suggesting this might affect Petronas performance in the future, given that it is a major global organisation, ranked third worldwide as an LNG supplier if I’m not mistaken. What is your comment on this issue?
Premier: Well, we have been collaborating with Petronas for a long time in oil and gas exploration. However, in Sarawak, within Sarawak’s waters, we hold 60 per cent of Malaysia’s (gas) reserves and this is managed by Petronas.
Under the Petroleum Development Act 1974 (PDA 74), what has happened is that as a gas aggregator, we are taking over this function from Petronas based on existing laws.
Actually, Sarawak already has its own law, the Oil Mining Ordinance (OMO) 1958, and part of the activities related to gas distribution or aggregation is carried out by Shell.
When we have Petronas, therefore, the concessions under this company, which are also anchored to the PDA, are implemented and managed by Petronas even though, fundamentally, we also have a law that allows us to carry out aggregation activities.
And Sarawak has been exempted to have the power to collect gas and distribute gas, and this power is with Sarawak, and maybe initially it was only focused on Liquefied Petroleum Gas (LPG). But according to the definition of the distribution of gas, it means any gas that you distribute, whether LPG in tanks or by ship, that encompasses the distribution of gas.
Thus, we have established our laws to regulate gas distribution. That is why we brought our legislation to the Sarawak Legislative Assembly (DUN) in 2023, which means, in line with legal provisions, we are taking over Petronas distribution function. However, Petronas still retains the function of exploration and mining. Only the gas distribution is being taken over.
The second matter is that there is indeed a different legal interpretation regarding the continental shelf. So, the continental shelf, it is actually an extension of Sarawak land.
According to the 1954 Queen in Council, this is the property right of Sarawak. So, when we formed Malaysia, that was our boundary, and the boundary cannot be changed except in accordance with Article 2 of the Malaysian Constitution. Where, if the boundary is to be changed, it must have the consent of the DUN and the Conference of Rulers.
When we formed Malaysia, that is our boundary. There are many different interpretations of this, so for the whole of Malaysia, I think we have arrangements without affecting our legal rules from the perspective of Sarawak’s boundary.
Another important aspect of the constitution is Article 47 of the Sarawak Constitution, which states that ownership transfer on Malaysia Day, previously under the colony, was handed over, the word they use is vested – to the state of Sarawak including including land and the Sarawak Land Code.
This is the issue, but there’s no problem, so what we do in Sarawak is according to the law. And if we follow the constitution, not the law, the law is subordinate to the constitution; otherwise, the constitution would be ultra vires.
So, what we are doing now is cooperating with Petronas, and as a result of any activity, we share the benefits. Because 60 per cent, 62 per cent of gas reserves are in Sarawak, and those involved in this industry are Petronas and Petros, both.
So, there is actually no problem, only from the legal perspective because Petronas relies on the PDA, and we rely on the OMO. It has been decided in a case that the OMO and PDA coexist.
But many have made this a big issue, with some saying Petronas will lose hundreds of billions. To me, no, it does not affect Petronas’ revenue.
There is indeed a slight impact due to the gas distribution, and I feel this matter can be resolved, and in fact, there is already a resolution. However, I cannot disclose it at this time. Let the Prime Minister announce our resolution formula.
Moderator: Is it resolved?
Premier: It is resolved.
Moderator: So, respected audience, the explanation given by Premier just now has answered many of the questions regarding the validity of the PDA, the validity of the state constitution, and also the OMO, and the level of cooperation between Petronas and Petros.
As per YAB earlier, it is resolved, just waiting for the right time to be announced.
So, respected audience, I am reminded of a quote from a leader in Europe, there are days, weeks and decades that pass, but nothing happens, nothing changes. But there are days, weeks when decisions are made, and their effects are talked about for decades.
We thank Premier again for this sharing. That’s all for now, wabillahi taufiq, Assalamualaikum and good day.
