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Some of RM2.2 billion owed to Sabah Development Bank by peninsula borrowers
Published on: Thursday, November 30, 2023
By: Anthea Peter
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Some of RM2.2 billion owed to Sabah Development Bank by peninsula borrowers
Masidi assured that the State Government is taking strong measures to recover as much of the debt as possible, including restructuring the SDB, appointing a new Board of Directors and assuming full ownership of SDB under the Chief Minister (Incorporation) Ordinance.
GOVERNMENT-LINKED companies (GLCs) in Sabah owe a total of RM2.2 billion to the Sabah Development Bank (SDB) as of the third quarter of this year, said State Finance Minister Datuk Seri Masidi Manjun. 

He said of the figure, RM1.2 billion is the remaining debt owed by Sabah International Petroleum (SIP).

“After SMJ Energy Sdn Bhd took over SIP, RM700 million has been settled in the first phase,” he said during question time at the State Assembly sitting, Wednesday. 

He was responding to Senallang Assemblyman Datuk Seri Mohd Shafie Apdal who asked how much is owed by GLCs in Sabah to the SDB, why the State Government has to bear the loss and what steps the Government will take to deal with the large debt. 

Masidi said the unpaid debt by GLCs is the balance of SDB loans by GLCs that could not repay their loans and thus ceased to operate.

He explained that the GLCs’ failure to repay their loans is a loss that has to be borne by the State Government as stipulated in the 2010 Nominated Loan agreement, which clearly stated that SDB will not bear any risks or loss for defaulted loans. 

Masidi also acknowledged the problem of the SDB lending to peninsula companies that would seek out loans in Sabah after failing to obtain financing at other banks in their State, which was pointed out by Shafie in a supplementary question. 

“I know this is a big problem. 60 per cent of the loan portfolio is given to companies in the peninsula. This is a lesson for us. Sometimes companies from the peninsula run to Sabah to get loans, and I don’t understand why we entertain companies that are not eligible to get loans, and we become suckers in Sabah. 

“All of us inherited this problem, it was there before you (Warisan government) came in, and it was there before we (GRS Government) came in. But the difference is, I have decided to be unpopular by taking the bull by the horns and resolving it,” Masidi stressed. 

To this end, Masidi assured that the State Government is taking strong measures to recover as much of the debt as possible, including restructuring the SDB, appointing a new Board of Directors and assuming full ownership of SDB under the Chief Minister (Incorporation) Ordinance.

“Trust me, we have a new team that is capable of taking stricter action on those who owe us. We have even hired a new officer who has the reputation of being like an ‘ah long’ (loan shark) to make sure we can recover as much debt as possible. 

“I assure you, we are not people who are afraid to claim (owed money), even if we have to act like an ‘ah long’,” he said.

Masidi said writing off debt is also a Non-Performing Loan (NPL) recovery method to increase SDB’s credibility as a State Government Financial Institution in an effort to continue financing projects under the Strategic Cooperation Framework Agreement with Bank Pembangunan Malaysia Berhad.

“This solution will be implemented in stages starting 2024 until completion. Therefore, the State Government’s funding is able to increase SD Bank’s ability to boost economic development in the State. 

“The State Government is confident with this excess funding, SDB is able to finance development programmes that are socially and economically beneficial, through government agencies with strong finances,” he said. 

Additionally, Masidi said the State Government is working with the Malaysian Anti-Corruption Commission (MACC) to ensure that every person who has misappropriated funds within GLCs will be liable for their actions. 

“No stone will be left unturned,” he said, in response to a supplementary question by Moyog Assemblyman Datuk Darrell Leiking who asked if the State Government will publicly list GLCs who failed to pay their loans and if action will be taken on those who misused the money.

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