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Sabah trying to recover state funds loaned to GLCs

Publish date: Thu, 30 Nov 2023, 09:16 AM

KOTA KINABALU: Sabah will ensure it can recover as much money as possible borrowed from the state, including by private companies from the peninsula, says state Finance Minister Datuk Seri Masidi Manjun.

He said there will be no write-offs for loans by these companies and the state government will work to get what is owed to it.

He said the current government had inherited a huge amount of debt due to loans given to government-linked companies (GLCs) and private companies, including from the peninsula, by state-owned Sabah Development Bank (SDB).

Masidi said this should serve as a lesson to the state government when considering giving out loans in future.

“I don’t understand (why) we entertain companies that are not eligible to secure loans in the peninsula.

“We should learn from this – these peninsula companies that could not get loans from banks there will run over to Sabah (to secure loans),” Masidi told the Sabah state assembly here yesterday.

He was responding to Datuk Seri Shafie Apdal (Parti Warisan-Senallang) who had asked how much money was owed to SDB by Sabah GLCs and what form of action would be taken by the state government to recover these loans.

Shafie said the huge amount of debts was not caused by the previous state administration led by Parti Warisan but inherited by the Barisan Nasional government before it.

To this, Masidi said he was not pointing fingers at the previous Warisan government but wanted to state that a legacy problem exists in the state’s finances.

“It (the debt) was there before you and we came in,” he added.

Masidi said 60% of the loan portfolio was given to companies from the peninsula, adding that the state has a new team tasked with recovering the debts.

Sabah GLCs owed the state RM2.2bil, including RM1.2bil by Sabah International Petroleum (SIP).

He added that after state-owned oil and gas company SMJ Energy Sdn Bhd took over SIP, some RM700mil has been settled in the first phase of the debt repayment exercise.

Masidi said the state is able to write off debts by state GLCs due to a “nominated loan” agreement between the state government and SDB in 2010.

He added that these GLCs were unable to repay the loans.

“The failure by these GLCs to repay their debts means the state government has to cover the losses.

“This write-off is a non-performing loan (NPL) recovery method to improve SDB’s credibility as a state financial institution,” he added.

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