Malaysia potentially losing RM180m without bauxite tax, Rafizi claims

PKR Secretary general Rafizi Ramli claims Malaysia is losing revenue by not imposing an export duty on bauxite. — File pic
PKR Secretary general Rafizi Ramli claims Malaysia is losing revenue by not imposing an export duty on bauxite. — File pic

KUALA LUMPUR, Jan 12 — Putrajaya is letting RM180 million in revenue flow out of the country that it could have earned through export duty on bauxite mining, PKR MP Rafizi Ramli claimed today.

The federal opposition lawmaker said the Pahang government would still be earning the same as its current 5 per cent royalty from bauxite mining, but claimed the federal government was losing out without imposing export tax on the products.

“The federal government had made the decision to forego the imposing of the export duty on bauxite mining while miners are reportedly making a nett profit of 40 per cent for every tonne of bauxite,” he told a news conference at the PKR headquarters here.

“Unlike other major national industries like palm plantation that have a 10 per cent export duty imposed despite its nett profit being much lower than 40 per cent earned by the bauxite mining companies,” he added.

The Pandan MP said it was a shame the federal government had missed the opportunity as the money could have been channelled back to aiding the affected residents and rehabilitating the environment.

“If the federal government was sensitive and aware of the effects of bauxite mining, and the cost it would take to restore the environment, at the very least it should have the same 10 per cent export duty as the export of palm,” he said.

Based on a modest estimate of 20 million tonnes of bauxite exported in 2015 at an average price of US$45 (RM180) per tonne, Rafizi said bauxite sales out of Pahang would have been worth RM3.6 billion, adding that the figure tallied with the state government’s expected RM180 million revenue from its 5 per cent royalty collection.

He pointed out that while Pahang would have had to stop collecting royalties if Putrajaya imposed a 10  per cent export tax on bauxite, the export tax collection is subjected to a 50-50 share with the state government under the law, and cited from the Assignment of Export Duty (Mineral Ores) Act 1964 to support his claim.

“Taking these matters into consideration, I urge the Finance Ministry to verify these matters.

“Firstly, was that the Federal government had been careless in not imposing export duty on bauxite, as stated on Royal Malaysian Customs website, and secondly that said carelessness had caused the Federal government to lose out on at least RM180 million in the form of export duties in 2015,” Rafizi said.

While Pahang Mentri Besar Datuk Seri Adnan Yaakob previously stated that the state only made RM47 million from bauxite, the Malaysian Anti-Corruption Commission (MACC) projected that the revenue should have been five times more and is currently investigating the shortfall.

The Federal Cabinet had last week decided on a three-month moratorium beginning Friday on bauxite activities in Pahang following public backlash over its health and environmental consequences.

Natural Resources and Environment Minister Datuk Dr Wan Junaidi Tuanku Jaafar had previously said that three months period will be used to ensure all activities related to bauxite mining are stopped, the company’s stockpiles are cleaned and a new central stockpile location is set up before allowing bauxite mining to continue.