KUCHING, Nov 7 — The Sarawak government’s move to impose a 5 per cent sales tax on petroleum products produced in the state will not only affect Petronas but also the market, said Economic Affairs Minister Datuk Seri Azmin Ali.

He said the matter should be discussed further as any increase in costs due to additional tax would lead to lesser demand as it would be more expensive than products produced in other oil producing countries. 

"Nevertheless, we respect the proposal which had been tabled and I am taking a proactive stand to discuss the matter further with the Sarawak state government,” Azmin said adding that Petronas would also give their views on this.

He said this at a press conference after making a courtesy call on Sarawak Chief Minister Datuk Patinggi Abang Johari Tun Openg at his office at the Sarawak state legislative assembly building here today.

Also present was Works Minister Baru Bian.

According to Azmin, any increase in tax would have an impact on production of petroleum products in Sarawak.

Abang Johari, who is also Sarawak finance minister, in tabling the State Budget 2019 on Monday announced that the state government would impose a five per cent sales tax on petroleum products beginning Jan 2019.

In another development, the economic affairs minister said the federal government would ensure that Sabah and Sarawak would not miss out on infrastructure development projects.

He said the federal and state governments have agreed to work closely together to ensure that infrastructure development such as utility projects and upgrading of schools in both states would continue.

In addition, he said the federal government had decided to continue with the Pan Borneo Highway project in both states as the project would create economic opportunities.

He added that Abang Johari had in the meeting today assured that he would work on strengthening relations with the federal government. — Bernama