Tourism Tax: Good Policy Turns ‘Bad’; Have Borneo Rights Been Eroded?


COMMENT: The spat between (federal) Minister of Tourism Nazri Aziz and his Sarawak counterpart Abdul Karim Hamzah is not about the Sarawak/Sabah government against the federal government or the people of East Malaysia against the people of Semenanjung as many people think it is.

It is about the way Nazri responded to Karim who wanted the Tourism Tax to be deferred in Sarawak as ‘local concerns’ must be taken into consideration before the tax is implemented. The same concern was raised by a senator from Sarawak, Zaiedi Suhaili, during a debate in the senate.

As soon as Nazri fired his first salvo against Karim, calling him “samseng” (thug) and “setahun jagung” (greenhorn), all hell broke loose. Sabah and Sarawak leaders, joined by thousands of social media users, criticised Nazri for his remarks against Karim. Some went further by saying that the Tourism Tax is “illegal”, an attempt to undermine the Malaysian Agreement and to erode Sabah’s and Sarawak’s rights in the federation.


But is this the case?

Tourism Tax falls under the federal government’s jurisdiction after it was included as part of the items in the Federal List in 1994. The federal government has the legal right under the constitution to impose tax in the federation. Sabah, prior to the formation of Malaysia, gave up its right over taxation (except sales tax) in replacement for Special Grant as stipulated in Part Four of the Tenth Schedule of the Federal Constitution.

Does the Tourism Tax undermine the Malaysian Agreement? Does it erode Sabah’s and Sarawak’s rights? Some in the legal fraternity don’t think so as there is a clear demarcation of power between the federal and state governments as stipulated in the Federal, State and Concurrent List.


The onus is on Sabah and Sarawak to include tourism as part of their jurisdiction in the future through the country’s legal and constitutional process.

The next issue raised by many is, was Sabah and Sarawak properly consulted before the parliament debated the Tourism Tax Bill? If by consultation here we mean providing the avenue for Sabah and Sarawak leaders to give their opinions, there is a platform for them to do so through a debate in parliament.

But according to Hansard record, only Darell Leiking, a member of parliament for Penampang in Sabah and Zaiedi Suhaili, a senator from Sarawak, took part in the debate.

What could be the reason for the “absence” of Sabah and Sarawak lawmakers from such an important debate? Crucially, only Nazri and the Ministry of Tourism can explain whether Sabah and Sarawak tourism officials/stakeholders were involved in discussions at the departmental/ministerial/grassroots levels prior to the tabling of the Tourism Tax Bill.

It looks like the issue is not about the Tourism Tax per se but the importance of a clearly established and transparent line of communication between federal and state officials in the course of formulating and implementing a policy. By the way, given proper implementation and monitoring, the country will stand to benefit from the Tourism Tax (as explained at length in the Hansard).

Knowing Nazri, many are not really surprised by his “legendary” outburst but being a senior minister or “anak jantan” as he likes to call himself, he should by now know that it is not just what you say that matters but how you say it.

  • Dr Arnold Senior Lecturer at the Department of Politics and International Relations, Faculty of Social Sciences, Universiti Malaysia Sarawak. He is also Senior Fellow at SEEDS, a Sabah-based NGO.