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UCAPAN BELANJAWAN BAGI TAHUN 2017

OLEH YANG AMAT BERHORMAT

DATUK PATINGGI TAN SRI (DR) HAJI ADENAN BIN HAJI SATEM

KETUA MENTERI MERANGKAP MENTERI KEWANGAN SARAWAK

DI DEWAN UNDANGAN NEGERI SARAWAK

PADA 21 NOVEMBER 2016

Datuk Amar Speaker,

Saya mohon untuk mencadang suatu Rang Undang-Undang bertajuk “Suatu Ordinan bagi menggunakan sejumlah wang daripada Kumpulan Wang Disatukan untuk perkhidmatan bagi tahun 2017 dan bagi memperuntukkan wang itu untuk perkhidmatan tahun itu” dibacakan bagi kali yang kedua.

2.         Bismillahirrahmanirrahim, Alhamdulillah saya panjatkan kesyukuran ke hadrat ALLAH S.W.T. kerana dengan izinNya saya dapat membentangkan Bajet Negeri Tahun 2017 dalam Dewan yang mulia ini, dan berdoa agar ianya dapat mencapai tujuan seperti yang dihasratkan.

Challenges Ahead

Datuk Amar Speaker,

3.         As we are entering into an increasingly challenging phase of the development and economic transformation of the State towards a High Income Economy, it is imperative that I highlight some of the major challenges that we are facing in our continuous efforts in developing our State. The State government will continue to focus its efforts in restructuring and transforming the State economy towards achieving a developed State status by 2030. This is of utmost importance as the State is progressively moving into the next level of its development phase.

4.         While we are quite pleased with our progress and achievement, however, there are so much more that need to be done particularly in transforming the rural area to catch up with the development in the urban area. In this process of transformation, the State government will not be able to do it alone, but would require all the necessary support of the Federal government, especially in providing good public facilities and infrastructures, such as schools, clinics, hospitals, roads, bridges, water and electricity supplies in the rural areas. Such development programmes will require huge investments and concerted efforts from both the State and the Federal government.

Datuk Amar Speaker,

5.         With challenging and competitive global economy, the resilience of our State economy in the coming years will determine how far we can attain rapid and sustained economic growth and  development. Some of the major challenges that we are currently facing are:

• Slowing world economy especially in the Euro area and the Asian region particularly in China and Japan;
• Weaker Ringgit Malaysia;
• Lower commodity prices; and
• Higher cost of living and cost of doing business.

Datuk Amar Speaker,

6.         While acknowledging that challenges ahead are becoming more complex, we must remain focus in our development agenda. We are now operating in a world which is highly dynamic and volatile. In order for us to remain competitive, we ought to continuously broaden our economic base, enhance our knowledge, upgrade our skills, be more efficient, productive and innovative. We must inculcate a more pervasive culture of good governance and uphold the highest level of integrity. At the same time, be agile and vigilant in facing emerging external challenges arising from global and regional competitions, and the increasing volatility in the world economy.

7.         We take great pride that the State has been able to achieve its present level of development as a result of our ability to manage our resources effectively and our continuous efforts to promote unity and harmony among our people despite facing many challenges along the way. This reflects the resilience and the strength of our people, our social unity and our political stability.

Datuk Amar Speaker,

8.         I would now like to update this august House on the latest economic performance of 2016 and the outlook for 2017.

ECONOMIC PERFORMANCE 2016 AND OUTLOOK 2017

Global Economy

9.         The International Monetary Fund (IMF) in its October 2016 World Economic Outlook estimated that the world economy projected to remain modest at about 3.1% in 2016, slightly weaker than their earlier estimates of 3.2% in July 2016. IMF anticipates global economy to grow by 3.4% for 2017, influenced by the performance in the United States, Canada, Euro and Japan with economic, political and institutional uncertainties following the Brexit and recent US election. The growth in advanced economies for 2017 is expected to be at 1.8%. The emerging market such as India and other developing economies are also expected to support global growth momentum in 2017, despite an expected slowdown in China. Growth in Asean-5 for 2017 is expected at 5.1%.

NATIONAL ECONOMIC PERFORMANCE IN 2016

AND PROSPECTS FOR 2017

Datuk Amar Speaker,

10.       After registering a growth of 5% in 2015, the National economy is estimated to slow down to between 4.0% and 4.5% this year affected by the slow global growth, the low prices of oil and commodities, the weakening of the Ringgit, and the reduction or removal of subsidies on essential items.

11.       In the first half of this year, the growth was 4.1% supported by investment activities in services and manufacturing sectors. The Federal Government is optimistic that the national economic growth can expand by 4.0% to 5.0% in 2017. The growth is anticipated to be driven by domestic infrastructure expenditures and foreign direct investments.

STATE ECONOMIC PERFORMANCE 2016

AND OUTLOOK 2017

Datuk Amar Speaker,

12.       I shall now move on to the Sarawak economy. This year, the State economy is expected to remain resilient and estimated to grow between 3.5% to 4.0%, despite softening export growth due to lower commodity prices. For 2017, with the expected improvement in the global economy, particularly in emerging market, growth is expected to improve slightly at around 4.0% to 5.0%.

Supply Side

13.       On the supply side, the GDP growth in 2016 is expected to be broad based. The services sector which accounts more than 30% of the State economy is expected to grow at 4.7% in 2016 driven by the utilities, transport, storage and communication, wholesale and retail trade, accommodation and restaurant sub-sectors. The State received 3.5 million visitors in the first half of 2016 attributed by various programmes and initiatives undertaken by the Government in spurring the tourism sector.

14.       Next year, the services sector is projected to grow by 5.5%, with continued expansion in all sub-sectors to meet the growing demand from the domestic economic activities.

15.       The manufacturing sector is expected to grow at 5.0% this year, supported by better performance in wood-based and basic metal products particularly by the industries in Samalaju Industrial Park. Next year, the manufacturing sector is expected to grow by 5.3%. The growth is anticipated to be driven by higher demand for resource-based products, and construction-related materials to meet the favourable domestic demand.

16.       The construction sector is projected to grow by 8.0% in 2016, benefiting from the implementation of the various Government projects under the Eleventh Malaysia Plan and the rural transformation projects throughout the State, as well as the on-going construction of the Pan-Borneo Highway. The growth is also anticipated to be supported by the strong construction activities by the private sector in both the residential and non-residential subsectors. For 2017, the construction sector is expected to accelerate by 10.2% as construction activities under the Eleventh Malaysia Plan is anticipated to gain momentum.

17.       This year, the agriculture sector is expected to grow at a slower pace of 1.5%, mainly due to the lower production of the crude palm oil affected by the adverse weather condition in the first half of 2016. For 2017, the agriculture sector is anticipated to improve with a projected growth at 2.3% to be supported by the anticipated higher production of palm oil and other food commodities.

18.       The mining sector is estimated to grow marginally at 0.6% in 2016, as output for crude oil is expected to decrease mainly due to prolonged low global prices uncertainties. For 2017, growth in this sector is expected at 2.1% driven by the expected higher output of natural gas.

Demand Side

Datuk Amar Speaker,

19.       On the demand side, domestic demand remains as the key driver of growth in 2016. Public investment is expected to grow at 4.2% this year, driven by the on-going implementation of projects under the Eleventh Malaysia Plan and the rural transformation initiatives as well as the Pan-Borneo Highway.

20.       In 2017, public investment is expected to increase by 7.7%, as more projects approved under the Eleventh Malaysia Plan and Rural Transformation Programmes will be rolled out for implementation particularly to bridge the development gap between the urban and the rural areas.

21.       Private investment is anticipated to expand at 7.3% in 2016, driven by favourable business climate and continuous pro-business initiatives by the Government. For the first half of 2016, a total of RM1.9 billion worth of investment was approved in the State. In terms of loan by the banking system, all economic sectors such as agriculture, mining, manufacturing and services registered positive growth in the first half of this year.

22.       For 2017, private investment is forecasted to grow by 7.1%, continued to be supported by the on-going investment projects as well as investment in export-oriented industries.

23.       Growth in public consumption is expected to increase moderately at 4.3% this year, underpinned by sustained government spending. Next year, it is expected to grow by 4.9% with the expected increase in operating expenditures in line with the Government effort to enhance service delivery.

24.       Private consumption is projected to grow at 5.6% in 2016, supported by the increase in disposable income, lower fuel price, increase in cash assistance programmes to the targeted income groups, as well as the increment of minimum wage for workers in the private sector and the salary adjustment of the civil service.

25.       For 2017, private consumption is projected to expand by 5.8%, benefiting from the expected stable employment condition, manageable inflation and continued cash assistance to targeted income groups which are expected to increase household purchasing power for the year.

External Trade

Datuk Amar Speaker,

26.       In the first half of 2016, the balance of trade continued to record a surplus, amounting to RM18 billion despite contraction in gross exports. The gross exports are expected to grow marginally by 0.2% this year. For the same period, the gross exports contracted by 21.3% due to weaker commodity prices, particularly for oil and gas products. Export receipt from crude petroleum dropped by 25.2% during this period. However, the drop in total export receipt was cushioned by the higher demand for our manufactured goods, which increased by 16%.

27.       Gross imports are expected to increase by 0.4% in 2016. In the first half of 2016, the total imports value increased by 1.4% underpinned by higher demand for capital and consumption goods.

28.       For 2017, external trade is expected to rebound in tandem with the better growth prospects in the emerging market and developing economies. The gross exports are expected to grow at 1.3% and the gross imports at 1.7%. Inflation Datuk Amar Speaker,

29.       Consumer prices rose at a slower pace of 1.4% in the first nine months of 2016. Of the Consumer Price Index (CPI) components, price increases in food and non-alcoholic beverages category was the main contributor, accounting for 1.0% of the overall inflation rate during this period. For 2017, the government will continue its efforts to cushion inflation through the various programmes such as BRIM and Kedai 1Malaysia. Inflation for the coming year is anticipated to remain manageable below 3.0%.

FINANCIAL PERFORMANCE OF THE STATE,

THIRD QUARTER 2016

Datuk Amar Speaker,

30.       Before I present the proposed 2017 Budget, I would like to update this august House on the State financial performance ending third quarter of 2016.

Revenue, Third Quarter 2016

31.       Revenue registered for the period ending third quarter of 2016 was RM4.167 billion, which is 75% of the total estimated revenue of RM5.548 billion for the year.

Expenditures, Third Quarter 2016

32.       For the period ending third quarter of 2016, a total of RM3.791 billion of Ordinary Expenditure or 69% of the approved annual allocations of RM5.373 billion had been expended. Out of the total amount of Ordinary Expenditure expended during the period, RM1.541 billion was for operating expenditure while the balance of RM2.25 billion was appropriated to the Development Funds Account.

33.       As for development expenditure, for the period ending third quarter of 2016, RM2.864 billion had been expended. Expenditure is expected to increase as activities continue to pick up during the last quarter of the year.

34.       I would like to urge all parties concerned to continue with their commitments to monitor projects closely in order to ensure that all projects are being implemented as planned and within the budget. Therefore, all programmes and projects especially those in the rural areas that are of high impact, and which have greater spill-over effects to the rakyat at large, must be implemented expeditiously to further spur economic growth and the development of the State.

35.       The State Barisan Nasional Government and its machinery will continue to ensure that all projects under the State Eleventh Malaysia Plan, Rural Transformation Initiatives, the Federal Rolling Plan, the Pan Borneo Highway Project as well as projects under SCORE are implemented efficiently, effectively and completed as scheduled. This is vital to support and sustain the State economic growth and development.

STATE BUDGET PROPOSAL FOR 2017

Datuk Amar Speaker,

36.       I would now like to present to this august House, the 2017 State Budget Proposal.

37.       The 2017 State Budget will continue to be development biased and rural focused.

38.       In the preparation and formulation of the 2017 State Budget, we have not only taken into consideration of various challenges that we are facing from both the domestic and external fronts but also take cognizance of the latest global development and the anticipated possible outcomes that could have an impact on the development of the various sectors in the State economy.

Objectives and Strategies of State Budget 2017

39.       In our continual efforts to achieve a greater and more balanced development and to support a desired level of economic growth, the State Budget will focus on the following key objectives and strategies:-

First: Development Biased Budget. To stimulate a desirable level of economic activities and sustain economic growth during the year, Budget 2017 will continue to be development biased. A sum of RM5.928 billion or about 73% of the total budget is proposed for development while an amount of RM2.206 billion, or 27% is proposed for operating expenditure. Being a developing State, it is essential that we continue to have a budget that is biased towards development;

Second: Rural Biased Budget. In pursuing the objective of continuing to narrow the development gap between urban and rural areas throughout the State, the Budget will provide more than 50% allocation for rural areas in 2017 amounting to RM2.982 billion. This provision is higher as compared to RM2.354 billion in 2015 and RM2.65 billion in 2016. This is also in line with our commitment to give greater focus on the implementation of programmes and projects in the rural areas to accelerate rural development transformation. Such efforts will also open up greater opportunities for development in the rural areas to benefit our rural communities;

Third: The Agenda of Sarawak Transformation. The 2017 Budget proposal also takes into special consideration of “The Sarawak Transformation: The Way Forward”. I had informed this august House in the last Dewan Undangan Negeri Sitting that 3 Cabinet Committees would be formed to drive the Sarawak Transformation. I am pleased to inform that several Key Result Areas have been identified by the Committees for implementation. For these transformation initiatives, the State proposed a total allocation of RM817 million in 2017. This is made up of RM797 million for development expenditure and RM20 million for operating expenditure to further spur the economic growth and development.

Fourth: Growth to be driven by productivity and efficiency. Concerted efforts must be made to:-

• manage and control operating expenditure to avoid suffering from a “Runaway Operating Budget”; and
• optimize the use of available resources and minimize wastage.

Fifth: The 2017 Budget will continue to give special focus on enhancing the effectiveness of the State Government financial management and the efficiency of its delivery system;

Sixth: The development allocation continues to give priority to Commerce and Industry Sector as well as other economic activities and productive sectors such as Social and Community Development, General Administration, Transport and Communication, Public Utilities and Agriculture and Land Development.

Revenue Estimates for 2017

Datuk Amar Speaker,

40.       For 2017, the State revenue is projected at RM5.321 billion:-

(a)        Tax Revenue is expected to be at RM1.25 billion comprises the following: (i) RM539 million from forest royalty and premium; (ii) RM440 million from sales tax. Of which, RM320 million is expected from Crude Palm Oil and Crude Palm Kernel Oil while RM120 million from lottery; and (iii) RM271 million from raw water and mining royalties, land rents and others.

(b)       Non-Tax Revenue is projected at RM3.9 billion derived from the following major components: (i) RM1.577 billion from cash compensation in lieu of oil and gas rights; (ii) RM755 million from dividend income; (iii) RM1.011 billion from interest income; (iv) RM300 million from land premium; (v) RM120 million from cash compensation in lieu of import and excise duties on petroleum products; and (vi) RM137 million from others, including licences, service fees, permits and rentals. (c) Non-Revenue Receipt is expected to be at RM21 million, mainly from forest liquidated damages and disposal of assets; and (d) Federal Grants and Reimbursements is expected to be at RM150 million.

Ordinary Expenditure Estimates For 2017

Datuk Amar Speaker,

41.       A sum of RM5.706 billion is proposed for Ordinary Expenditure for 2017. Out of this total allocation, RM2.206 billion is for operating expenditure and a sum of RM3.5 billion is proposed to be appropriated to the Statutory Funds, to finance development programmes and projects.

42.       The proposed allocation of RM2.206 billion for operating expenditure next year is an increase of RM133 million or 6% over the approved expenditure of RM2.073 billion for this year.

43.       Out of the amount proposed for operating expenditure in 2017:- (a) RM735 million or 33% of the total operating expenditure for personnel emoluments; (b) RM749 million or 34% for supplies and services; (c) RM678 million or 31% for grants and fixed payments, including operating grants to Statutory Bodies and local authorities, servicing of public debts and payments of gratuities, pensions and scholarships; (d) RM34 million for the procurement of assets; and (e) RM10 million for other operating expenses.

Development Expenditure

Estimates for 2017

Datuk Amar Speaker,

44.       Now I would like to deliberate on the proposed Development Expenditure Estimates for 2017. The estimates have taken into consideration among others, our commitment to complete the implementation of the on-going projects as well as the capacity of our State agencies to implement projects during the year. The Budget proposed a sum of RM5.928 billion to finance various programmes and projects under the Eleventh Malaysia Plan of the State including the State transformation initiatives in 2017.

45.       Of the total provision for development expenditure, RM5.646 billion will be funded by the State while RM282 million will be financed by the Federal Government through reimbursable loans and grants.

Distribution of Development Expenditure Estimates 2017

Datuk Amar Speaker,

46.       I shall now highlight on the distribution of the Development Budget for the year 2017.

47.       The proposed Budget for the year is fairly distributed to ensure a sustainable and balanced development throughout the State particularly between the urban and the rural areas. The Government will continue to undertake proactive measures to develop the rural areas especially those that can be harnessed for their economic potential to contribute significantly to the State economy as well as benefiting the well-being of our rakyat. This would enable the rural areas to catch up with the development in the urban areas.

48.       The 2017 Budget gives greater emphasis in developing the necessary infrastructure and amenities such as roads, drainage, telecommunication, electricity and water supplies aimed at improving the quality of life, and at the same time attracting higher investment into these areas.

49.       The proposed sum of RM5.928 billion for Development Expenditure in 2017 is for the implementation of various major programmes and projects as follows:-

(a)     Improving the Connectivity of the State

To further improve the connectivity of the State, more roads and bridges would be built. For this purpose, RM429 million will be allocated for the implementation and completion of various projects, amongst others:-

• Proposed Jalan Kuala Serupai / Kuala Tatau and proposed Bridge over Kuala Tatau at Kpg Seberang, Bintulu;
• Proposed Sg. Limbang Bridge, Sg. Bunut No. 2 Bridge and connecting roads, Limbang;
• Pembinaan Jambatan Long Lama, Batang Baram, Miri;
• Proposed Datuk Temenggong Abang Kipali bin Abang Akip Interchange via Shallow Underpass, Kuching; and
• Proposed upgrading of Jalan Datuk Stephen Yong Link to Jalan Batu Kawa, Kuching.
• In addition to these projects, the State Government is proposing to allocate RM100 million to kick-start the implementation of the coastal roads projects.

(b)       Expanding Coverage of Clean Treated Water Supply throughout the State

The State Government will continue to extend coverage of water supply especially to the rural population. A sum of RM387 million will be provided in 2017 for the implementation of various water supplies projects such as:-

• Proposed pipeline from Assyakirin Reservoir to Nyabau Water Treatment Plant Intake;
• Upgrading of Berawan Water Treatment plant;
• Water Supply Dalat Phase II;
• Bekalan Air Sg. Asap; and
• Relocation of Kuching / Serian Road pipeline.
• (c) Strengthening Agriculture Development In our continual effort to assist smallholders and farmers in the rural areas, a sum of RM229 million will be allocated. The major projects for implementation, among others are:-
• Crop Industry Development which include sago, rubber, paddy, coconut, fruits and herbs;
• Smallholders oil palm plantation projects in Sri Aman, Sarikei and Serian; and
• Inland fishery and livestock related projects.

(d)        Accelerating Development in the Rural Areas

Many of the projects as highlighted earlier are for rural development. To further intensify development in the rural areas, a sum of RM743 million will be provided in the 2017 Budget of which:-

(i)           RM500 million will be allocated under the Rural Transformation Programmes; and

(ii)         (ii) RM243 million under Minor Rural Projects. These allocations are in addition to the Rural Transformation Initiatives that I have mentioned earlier and are meant for the implementation of various smaller projects throughout the State targeting to benefit the rakyat directly in rural areas. Overall, the State government proposed a total allocation of RM2.982 billion next year for rural development.

(e)        Further Development of Industrial Estates

In line with the State industrialization strategy especially to benefit the small and medium industries, a sum of RM67 million will be provided for the implementation and completion of projects, among others:-

• Biovalley Satellite, Miri;
• Demak Laut Industrial Park;
• Sri Aman Industrial Estates;
• Lundu Industrial Estates; and
• Betong Industrial Estates.

(f)        Providing Affordable Housing for the rakyat

Taking into consideration the well being of the rakyat, the State is undertaking various housing projects targeting at the lower income group. For the Eleventh Malaysia Plan, the Government is expected to build 2,396 units of Rumah Mampu Milik and Rumah Mesra Rakyat at a total cost of RM232 million. To complement the allocation provided by the Federal government in 2017, the State also proposed to allocate a sum of RM66 million to undertake the following projects throughout the State:-

• Construction of 1,040 units of Rumah Mampu Milik;
• Construction of 140 units of Rumah Mesra Rakyat; and
• Implementation of 17 Kampung Extension Schemes.

(g)        Stepping Up Human Capital Development

The State government is stepping up its human capital development with priority in technical and vocational education. For this, a sum of RM95 million will be allocated to implement projects as follows:-

• Construction of educational institutions such as Pusat Pembangunan Kemahiran Sarawak (PPKS) Mukah and Kolej Laila Taib; and
• Centres of Technical Excellence (CENTEX) in Kuching, Lundu and Lawas.

(h)       Improving Public Sector Service Delivery

In our continuous efforts to enhance the public service delivery, a sum of RM42 million is proposed to build new and to replace aged government administrative centres, offices and quarters in the State. This is in line with our effort in taking care of the well being of our civil servants especially those serving in the remote areas.

Datuk Amar Speaker,                                                                     

50.       The development allocation as proposed shows only a partial picture of the overall public sector expenditure in the State as the programmes and projects funded directly by the Federal Government are not reflected in the State Budget proposal.

Ensuring Sustainable Economic Growth

51.       The proposed 2017 Budget is anticipating a Budget Deficit of RM385 million. This would be the first budget deficit after 14 consecutive years of strong track record of budget surplus. The budget deficit for 2017 is on the basis of expected total revenue of RM5.321 billion against a total Ordinary expenditure amounting to RM5.706 billion.

52.       Since 2015, the State revenue is on a declining trend, significantly impacted by the falling of oil and gas prices; and the weakening of Ringgit Malaysia. And at the same time, expenditure is on a rising trend.

53.       In the face of a weak global economy next year arising from various uncertainties that I have highlighted earlier, it is imperative that the State continues to have an expansionary fiscal policy so as to cushion the economic recessionary pressures. This is also to ensure a continual development momentum in the State to support the State much needed economic and rural development. In the light of this, the State government therefore proposed for a higher development budget for 2017 so as to sustain a desired level of economic growth and development.

54.       The State government had also taken steps earlier to reduce electricity tariff, land rents and assessment. These measures, besides relieving the cost of living, would also improve disposable income and anticipate to increase private consumption to sustain economic growth.

Sarawak Transformation: The Way Forward

Datuk Amar Speaker,

55.       In the last DUN Sitting, I have announced that the State will embark on a deliberate transformation initiatives through three cabinet committees in three main areas namely:

(a)     Socio-Economic Transformation;

(b)     Rural Transformation; and

(c)     Performance and Service Delivery Transformation.

The objectives of these transformation initiatives are to undertake intervention action plans in areas of our socio-economic development and matters related to rural growth and service delivery. For these three transformation initiatives, I am pleased to inform that the State Government will allocate RM817 million for 2017 to fund both the related development and operational expenditures.

Socio-Economic Transformation

Datuk Amar Speaker,

56.       To accelerate the socio-economic development of the State, six (6) Key Result Areas have already been identified by the Cabinet Committee on Socio-Economic Transformation for the State initial intervention, as follows:

(i)    Increasing Investment in the Industrial Sector especially in Oil & Gas and timber downstream industries.

• There is an urgent need to increase investment in oil and gas downstream industry. Therefore, the State must have sufficient supply of oil and gas. In view of this, the State Government will intensify our negotiation with PETRONAS to ensure continuous supply of oil and gas for the development of more industries in the State and will set up a Special Purpose Vehicle (SPV) with other established oil and gas companies in the exploration of upstream oil and gas resources.
• In the timber based industries, we are targeting to increase the number of value added downstream timber based industries in the State within the next 5 years. For this purpose, the State Government will introduce new and refined timber industry policies to encourage more downstream activities. To begin with, RM5.0 million will be allocated in 2017 to establish a Timber Downstream R&D Centre. This Centre will be tasked to improve the current technologies and to develop innovations that can help to strengthen the timber based industries in the State.
• The State is also targeting to have more value added downstream activities for the non-resource sector leveraging on the existing heavy industries in Samalaju Industrial Park, Bintulu and Matadeng, Mukah. Preliminary works will be undertaken to develop SME Clusters and supporting industries in these areas.
• The State Government will continue with its plan to improve and enhance the existing industrial parks in Rantau Panjang, Sibu and Demak Laut, Kuching. RM2.0 million will be allocated for 2017 to implement these projects.
• The State Government will also optimise the utilization of land within the industrial estates by introducing new conditions in the alienation of land for industrial use so that more SMEs are established in the industrial estates.
• To attract more investment into the State, we need to have effective investment and promotion strategies. For this reason, we will enhance our promotion initiative to be more focused, structured and systematic. RM1.8 million will be provided in 2017 for promotional investment activities.

(ii)        Modernising and Commercialising the Agriculture Sector

• One of our biggest challenges is to reduce the development gap between the rural and urban areas, not only in terms of infrastructure but also the income of our people. The rural areas are blessed with vast agriculture resources which potential can be harnessed through modernising and commercialising the agriculture sector. Agriculture is no longer just about farming, but a business that will raise the income of farmers.
• We will look into the overall supply chain of the agriculture industry in the State which includes revitalising and improving the local farmers agriculture products and marketing, increasing private sector investment and commercialising research and development. RM80.0 million will be allocated in 2017 to revitalise and improve local farmers products and marketing which includes:

(a)          RM8.0 million will be allocated to strengthen the distribution network through the setting up of collection, processing and packaging centres at Layar Station, PPK Lundu, Temudok Station and Individual Quick Freezing (IQF) Tarat;

(b)          (b) RM20.0 million will be allocated to provide better accessibility between the farms and markets by developing more farm infrastructure; and

(c)          (c) RM52.0 million will be allocated to improve production of agriculture products through the provision of agriculture incentives for planting of coconut, sago, pepper, oil palm; swiftlet farming; rehabilitation of existing orchards as well as to increase cattle population through cattle integration within oil palm estates.

(iii)    Creating New Growth in the Services Sector

• Services sector is an important driver of our economy. We need to create new growth impetus in this sector by leveraging on tourism as the key driver. We will focus allocation for the development of new and diversified tourism products, attractions and events that will transform the tourism industry. The major initiatives are as follows:

(a)     RM8.0 million will be allocated to develop a strong brand for Sarawak. Research will be conducted with experts to identify the most suitable brand, which are not limited to tourism.

(b)     RM4.5 million will be allocated for Airline incentives to organise more chartered flights to bring more tourists to the State.

(c)     RM12.3 million will be allocated to improve tourism infrastructure as well as conservation and restoration of heritage.

(d)     RM18.5 million will be allocated for the enhancement and development of tourism products which include reimaging Rainforest World Music Festival, AIFFA, Kuching Waterfront and Brooke Dockyard Maritime Museum.

(e)     RM2.0 million will be allocated to develop Sarawak Apps for digital marketing; and (f) RM2.7 million will be allocated to develop Tourism Satellite Account for accurate and reliable data on tourist expenditure, arrival and departure for strategic planning.

• We hope that tourism industry players will benefit from these initiatives in our efforts to transform the tourism industry in the State.

(iv)        Urban Development and Urban Renewal

• More than 50% of the State population are currently residing in the urban areas. We have to take proactive approach to manage the challenges brought about by the rapid urbanisation. The economic vibrancy of the urban areas would need to be revitalised, while more employment and business opportunities need to be created. Comprehensive Urban Master Plans for major towns will be formulated to ensure an orderly development.
• We will focus on expanding the urban economy by developing niche factor of our cities and towns whilst giving more recognition to the informal sector as one of the economic growth factors. For this purpose, RM30.0 million will be allocated to develop more hawkers markets and entertainment centres in the major towns especially Kuching, Sibu, Miri and Bintulu. In addition, we will intensify private sector participation in the waterfront development to increase economic activities along our waterfront.
• Rundown areas and dilapidated buildings in the urban centres will be redeveloped and retrofit for commercial purposes. State Urban Renewal Master Plan will be formulated to guide the urban redevelopment while incentives will be offered to developers to encourage them to rejuvenate the urban areas.
• Traditional villages around the urban centres will be redeveloped in phases to take care of the livelihoods of the people.
• Urban critical mass is crucial to create more vibrant economic activities in the urban centres. Therefore, land use in major urban centres will be optimised through densification policy by promoting high density housing with retail clusters.
• We need to speed up the development of public transportation system, particularly in Kuching City. The Sarawak Public Transport Authority would be established to plan, manage and regulate the public transportation system in the State.
• Urban drainage requirement would be included in the Urban Land Use Master Plan as part of our strategies to reduce occurrence of flash flood in the urban areas. Flood Mitigation and Urban Drainage Master Plan would also be formulated whilst Sarawak Urban Storm water Management or SUSTOM is now being implemented. We will work closely with Federal Government to address flooding in a more comprehensive manner. 

(v)     Increasing Participation in Entrepreneurship

Entrepreneurship is the key figure of economic development, the pivotal force of change in the market system that is able to create wealth from opportunities. Despite the many economic opportunities in the State, our business population is still small. The current scenario warrants necessary intervention by the Government to assist our people particularly the youth to harness them with knowledge and creativity in starting up business. Our target groups include those of low income group, technically competent individuals and graduates who are keen to venture into business. RM8.7 million will be allocated in 2017 to carry out various entrepreneurship development initiatives.

(vi)    Environment Development

Environmental protection is the primary concern for the future of humanity. We will continue to develop environmental friendly landfills and waste management facilities as well as to enhance the protection and conservation of lake, water catchment and forest.

On waste management and recycling, RM15.4 million will be allocated for the safe closure of the used dumpsites and landfills in the State and for the 3R (Reduce, Reuse, Recycle) programme.

RM1.5 million will be allocated to carry out assessment on Bengoh and gazetting of water catchment areas in Sarawak as part of our strategies to protect our water catchment areas and RM1.5 million will be allocated to drive forest management certification in the State to ensure that seven (7) areas under the Heart of Borneo initiative are to be certified by 2017.

Rural Transformation –

Basic Infrastructure and Social Amenities

Datuk Amar Speaker,

57.       As I have always mentioned, greater attention needs to be given to address the poor state of affairs and lack of basic infrastructure and social amenities in the rural areas. We are aware of the tremendous challenges as the rural communities are expecting the provision of their basic infrastructure and social amenities to be fulfilled in the shortest time possible. A large portion of our rural population have been waiting for too long for these basic infrastructure and amenities including roads, schools, clinics, treated water and electricity supply.

58.       The tasks ahead to address these gaps are enormous and will require systematic and integrated catch-up plan. Without any drastic measures, the situation will persist and deprive the rural community from enjoying the comforts and convenience available in the urban areas.

59.       As such, the State Government has formulated a rural transformation plan aims to address the situation. New strategies, unconventional approaches and out-of the box solutions are encapsulated in the rural transformation plan.

60.       Nine (9) Key Result Areas (KRAs) have been identified as key drivers to fast-track the provision of basic infrastructure and social amenities in the rural areas of Sarawak.

61.       For this purpose, RM329.8 million will be allocated to implement various programmes and projects under the rural transformation initiatives. This amount is to complement what the Federal Government has allocated to implement the various intervention programmes and projects. The key transformation measures which we plan to put in place in 2017 and beyond are:

(i)      Rural Schools

• The State Government is extremely concerned with the poor conditions of rural schools in the State. Our rural children deserve better learning environment which is more comfortable and safe. To achieve this, the Government will undertake to fast track the upgrading and construction of dilapidated rural schools using Industrialised Building System (IBS).
• The State Government has successfully negotiated that 194 dilapidated rural schools will be upgraded and maintained by the Federal Government in 2017. This will benefit 48,000 students. In addition to this, the State Government will allocate RM21.0 million in 2017 to upgrade 72 dilapidated rural schools.

(ii)     Rural Health Services

The State Government is fully aware that 329,000 rural populations are currently served by rural clinics without medical officers. To address this, the State Government will assist to establish 15 Travelling-Doctor Teams covering 64 rural clinics which have no medical officers. In addition, one Cluster Clinic System at Klinik Kesihatan Long Lama will be established. This cluster clinic will serve 15 nearby clinics benefiting 35,000 people. The State Government will allocate RM2.8 million in 2017 for these purposes.

(iii)    Rural Roads

There are many settlements in the rural areas that lack road access. As such, the State Government will undertake to improve the connectivity to these rural settlements to benefit the rural communities.

(iv)    Rural Water Supply                

• Presently, 114,000 rural households are still not provided with treated water supply. To address this, the State Government will implement various intervention initiatives through the construction of sub-main and communication projects, renewal of pipelines, retrofitting of treatment plants and reservoirs.
• The State Government will also introduce new approach in addressing this problem through the implementation of Sarawak Alternative Rural Water Supply (SAWAS). SAWAS is specifically designed to benefit areas that could not be connected to the watermains. For these initiatives, the State Government will allocate RM106 million in 2017.

(v)     Flood Mitigation

The State Government takes serious view of the flooding problem and is compelled to undertake a more comprehensive measure in flood mitigation. For 2017, the State Government would allocate RM100 million to implement 124 flash flood drain and road improvement projects in 112 flood prone areas.

(vi)    Communities Affected by Hydro Projects

In order to facilitate development within the resettlement areas, an initial allocation of RM1.5 million will be allocated to deal with land matters.

Performance and Service Delivery Transformation

Datuk Amar Speaker,

62.       To be a progressive and prosperous Sarawak, the State is implementing a balanced development approach that gives equal emphasis to both the economic growth and the well-being of the rakyat. The State is focusing into specific areas of concerns that have immediate solutions. These Key Result Areas (KRAs) identified are:

(i)      Enhancing Quality of Education and Human Capital

• Education will continue to be our best guarantee for our future success. The findings on the levels of State quality of education and human capital show a huge gap to that of our Federal counterpart. Thus, it is important for the State to take the necessary actions to improve the quality of education in the State especially the education attainment of students of low performing school.
• The UPSR Grade Average at 2.48 is below the National Grade Average of 2.27. The State is targeting to enhance the UPSR Grade Average to 2.3 for 2017. At the same time, we have been facing shortage of teachers and insufficient number of students enrolling in Science, Technical, Engineering and Mathematics (STEM) and Technical Vocational Education Training (TVET) programmes.
• Therefore, it is imperative for the State Government to embark on intervention programmes to address this gap. To complement the Federal initiatives, the State will address the issues on shortage of teachers as well as focusing on developing excellent teachers. We also wish to instil leadership qualities among headmasters and school principals in order to attain Sarawak’s educational aspirations.
• High on the education agenda and priority list for the State is developing high quality English instructors to improve delivery of programs. Therefore, our next focus is to put Sarawak as the role model and subject expert in the Teaching of English as a Second Language. We also aim to cultivate students’ interest in STEM to improve graduate employability and enhancing our labour market to maximize efficiency and effectiveness.
• Enhancing on TVET programmes is significant in order to achieve sufficient number of human capital needed in STEM and TVET in Sarawak as we move towards industrialisation and meeting SCORE manpower needs. Efforts on rebranding TVET to increase its attractiveness as a pathway of choice will be intensified. Focus on new partnership models with industry and apprenticeships and work-based learning programmes become imperative.

(ii)        Sarawak as a Sports Powerhouse

We are also committed to make Sarawak as a Sport Power house and to be SUKMA Champion in 2018. Harmony and unity among the people of Sarawak can be further strengthened through sports. Such goal can be achieved through high pursuits of talent scouting, establishment of sport schools, assisting sport associations and developing quality coaching to produce international athletes.

(iii)       Improving Societal Well-being

• To ensure that the rakyat continue to co-exist harmoniously and peacefully, there is a need to manage public safety, strengthen solidarity and improve welfare services. The issues of crime and public safety are still a primary concern among our society in the State. It is our shared responsibility to take steps to ensure public safety to complement the efforts of the police and all law enforcement agencies.
• In 2017, the State wil activate 934 units of neighbourhood watch and establish 100 new Skim Rondaan Sukarela to enhance public safety in selected urban areas.
• On the aspect of solidarity, we have recently established Solidarity Unit under the purview of Ministry of Youth, Sport and Solidarity which serves to enhance unity among the various races in Sarawak.
• The State Government is concerned with the increase of welfare recipients over the last 5 years. A sum of RM2.0 million will be allocated in 2017 to increase the economic status of 27,000 productive welfare recipients through customised micro-entrepreneur development programme, skill development and job matching to increase self-reliance among the welfare recipients.

(iv) Providing an Excellent Service Delivery

• An efficient and effective public service is essential to support the various State transformation initiatives. The State is committed to transform the public service by becoming more rakyat-centric, enhancing the productivity through a talented work force and efficiency in systems and processes.
• Other intervention programmes under the State KRAs initiatives include improving the delivery and performance of Rural Transformation Projects (RTP), providing one stop services for the rakyat, enhancing the ease of doing business, providing emergency services outside office hours and improving State public relation strategies.
• The initiatives as highlighted would be measured through the State Scorecard, Agencies Scorecard and BN ADUNs Scorecard and KPI.

Federal Funding

Datuk Amar Speaker,

63.     Let me reiterate that it is critically important that the Federal Government must grant the State more funding to fund the much needed infrastructural projects such as roads, bridges, wharves and jetties, drainage, utilities, basic rural facilities and amenities, facilities for education and medical services as well as allocation to assist our farmers, livestock breeders and fishermen in the rural areas.

64.     Taking into consideration of the State vast geographical area, the huge development disparity between Sarawak and Peninsular Malaysia as well as the vast development gap between our urban and rural areas, the 2017 allocation under the National Budget to the State is barely sufficient. It is just NOT ENOUGH! The State is very much in need of the Federal helping hand in granting our State much more annual allocation to enable us to catch up in our development with those in Peninsular Malaysia and to narrow the development gap between the urban and rural areas.

65.     The Federal Government has the responsibility to provide public facilities and infrastructures to be at par with that of Peninsular Malaysia and at the same time to close the development gap between the urban and rural areas in Sarawak. Sarawak should not be left behind. We also want Sarawak to have the same facilities as enjoyed by those in Peninsular Malaysia.

CONCLUSION

Datuk Amar Speaker,

66.       I would like to emphasize that the global economic environment would continue to be very challenging in 2017, therefore, we ought to continue adopting prudent financial management so as to weather through such economic environment. And at the same time we must maintain the tempo of our development agenda at a sustainable level.

67.       Ahli-Ahli Yang Berhormat will note that the Budget continues to be development-biased and rural-focused. In this context for next year, we will spend about two third of our money on development. In addition, we will continue to pursue with the Federal government to obtain more financial allocation for development purposes so that the State can further progress and bridge the development gap with our counterparts in Peninsular Malaysia. 68. I would like to assure this august House that the State Government will continue to put in place strategic measures aimed at strengthening the financial discipline and management at all levels. We have to continue to manage our financial resources in a prudent manner to ensure financial autonomy and continue to strengthen our culture of financial discipline for long term financial sustainability and conserving resources for our future generations.

69.       On the part of the Government and the people, for us to ride through this challenging economic environment, it is very important for us to be agile, resilient, productive, efficient and remain united.

70. Datuk Amar Speaker, dengan ini saya mohon mencadangkan agar Rang Undang-Undang ini dibacakan bagi kali yang kedua.

TERIMA KASIH.