Trengganu & Kelantan not entitled to oil royalty, says Rafizi

Azalina Othman Said told the Dewan Rakyat that Kelantan and Terengganu did not qualify for a 5% royalty on petroleum because Petronas extracts crude oil beyond the three nautical mile limit.

(FMT) – Economy minister Rafizi Ramli has told Perikatan Nasional leaders to check their facts on their calls for petroleum royalty payments to Kelantan and Terengganu.

Rafizi said the Territorial Sea Act stipulated that state governments are only entitled to oil royalties if oil is found within three nautical miles of their shores.

“However, the bulk of the oil and gas discovered in this country is out of that range,” he said at a press conference here today.

Rafizi also said that 50% of Putrajaya’s funds for infrastructure development under Budget 2023 had been allocated to states like Kelantan, Terengganu, Kedah, Sabah, Sarawak and Perlis.

“The opposition should read up (on the matter) in detail before making comments, because it’s embarrassing,” he said in a dig at the PN leaders.

Last night, PAS president Abdul Hadi Awang said the government should give oil royalties to all states producing oil and gas, adding that Terengganu was among the first states where petroleum was found, after Sabah and Sarawak.

Hadi said Putrajaya needed to respect the rights of the state governments.

PN chairman Muhyiddin Yassin had also asked if the government would channel oil revenue directly to Kelantan and Terengganu, saying this was what had been done by his government.

In response, law and institutional reform minister Azalina Othman Said told the Dewan Rakyat that Kelantan and Terengganu did not qualify for a 5% royalty on petroleum because Petronas extracts crude oil beyond the three nautical mile limit.

Meanwhile, Rafizi said the finance ministry would ensure a “balance” would be struck on the proposed luxury goods tax, following calls for tourists to be exempted from the tax.

“We will strike a balance and that (exemption for tourists) will be taken into account,” he said.

He was responding to Puchong MP Yeo Bee Yin, who warned that imposing the luxury goods tax on tourists would make Malaysia less attractive to travellers, especially those from China.

Putrajaya is planning to introduce the tax this year under Budget 2023, imposing it on luxury fashion items such as high-end watches.