KOTA KINABALU:Sabah plans to broaden its revenue base in light of a projected RM600 million loss in oil royalties if the ringgit continues to strengthen against the US dollar, said Sabah Finance Minister Datuk Seri Masidi Manjun.
He said as oil and gas trading is conducted in USD currency at the international level, the revenue from the oil royalty, which contributes significantly to state coffers, could decrease due to the exchange rate.
"When the Ringgit strengthens, imports become cheaper, fertiliser and machinery will cost less, on that basis it is good. But purely on the question of royalty from Petronas that will be the problem.
"Because it was traded in USD and converted into ringgit, you get the 5 per cent (royalty) from the (current exchange rate of) RM4.2 dollar, previous one was from RM4.80, there is difference, this is what I mean about the potential loss."
Masidi was speaking to reporters after handing over RM56.75 million financial support to schools and non-Islamic religious bodies across Sabah at Menara Kinabalu here.
Describing the losses as a "worst-case scenario" projection, Masidi said that the situation would prompt the government to look into various income sources.
"We have a considerable reserve, but we need to widen our revenue base to bring in other sources, such as taxes, rather than depending solely on crude oil," he said, adding if the projected revenue shortfall materialises, Sabah would make necessary budget adjustments, maintaining a stable financial outlook despite external economic factors.
Meanwhile, commenting on Barisan Nasional (BN) chief Datuk Seri Dr Ahmad Zahid Hamidi's comment on finalised cooperation between BN and Pakatan Harapan (PH), Masidi said that politics is dynamic and could change anytime.
"Politics is very fluid and dynamic; 24 hours is a long time. Politics is very long; you just have to wait until the election.
"We should focus on working, solve the problems in the state rather than spending too much time thinking about politics, the best preparation is to do a good job," said the Gabungan Rakyat Sabah secretary-general.