The new WARISAN government’s decision to not honour the Sabah state government’s previous commitment to sell Sabah Forest Industries (SFI) to a credible local investor is a clear indication that the new leaders don’t have the best interests of Sabahans at heart.
SFI is one of Malaysia’s largest timber producers, and is also involved in downstream pulp and paper manufacturing. SFI, which was acquired by an Indian company, Ballarpur in 2007 is in a bad state and in need of a comprehensive structural overhaul. The Malaysian company was selected as the purchaser after a tender, having gotten the nod of approval from the previous Sabah government prior to the 14th general elections in May 2018.
It has solid plans to turn SFI around include developing SFI’s industrial site into the first ever bio-hub in the Southeast Asian region. Such a move will positively impact Sabah’s local population as it creates high income jobs, drastically improves local welfare and helps develop smaller businesses in Sabah.
However, Sabah’s WARISAN government helmed by Shafie is now backtracking on the previous government’s commitment.
Following a tender process in January 2018, the company submitted its offer for SFI assets and paid a 10 percent deposit amounting to RM120 million. A few months later in April, it signed the sales and purchase agreement (SPA) with Ballarpur and had 90 days to fulfil several conditions precedent before the takeover can be completed.
Two conditions, relating to the obtainment of the state’s consent and the issuance of timber licenses are still pending any action from Sabah’s state authorities. The longer the delay, the higher the chances of the deal failing and costing the jobs of approximately 1,500 SFI staff. In good faith and in the interest of the Sabah workers and their families, the company has paid the previous outstanding salaries of SFI staff to the tune of RM27 million and it now continues to pay the staff salaries, pending the completion of the sale agreement. Our state government’s action is morally and legally wrong.
The Sabah government’s actions are motivated by another tempting offer to purchase SFI, coming from Hong Kong-listed Chinese wood pulp company, Lee & Man Paper which is seeking to exploit Sabah forests for its China demand.
If the deal with Lee & Man Paper goes through, it would mean the transfer of SFI assets, land titles and timber licenses to a foreign entity who will have no interest in the welfare of the local population.
Lee & Man Paper is also notorious for causing widespread environmental damage. A similar business venture by them in Vietnam had caused environmental pollution in a Mekong Delta province and affected the livelihood of locals dependent on the Mekong River as a source of income.
Their operations have also often employed manpower directly from China, thus failing to create jobs and empower the local communities.
On the other hand, we have a Malaysian company owned by a team of competent Malaysians with plans to revolutionise Sabah’s timber industry into a thriving, world renowned bio-hub. The benefits are long-term and sustainable, as opposed to the short term prospects offered by Lee & Man Paper.
Sabah’s leaders need to wake up and make decisions in the interests of Sabahans and not themselves alone. If they truly care about the state, they would start by improving welfare for regular Sabahans – create more jobs, boost the local economy, preserve Sabah’s pristine environment. Don’t sell Sabah’s soul to foreigners just so that you can make a quick dollar.