RM98million – that’s the number that should be on the minds of people concerned with Sabah, Shafie Apdal, and Sabah Forest Industries (SFI). In fact it should be on the minds of anyone who has ever been interested in investing in Sabah. Let us give you an outline:
What is this RM98 million? It’s the amount of an unsecured loan given to Sabah Forest Industries Sdn Bhd, a pulp and paper company that is currently under the receivership of Grant Thornton. The loan, we assume, was taken out to ensure that the monthly salary payments could be made to the 1500 employees of SFI. Why did they need to take out a loan in the first place? That’s because SFI has had its operations halted for the past few years, and is not generating a profit, much less any revenue. So here you have a company that has no money in its coffers, but has great potential if someone were to come in and utilize that potential. All it would need is a company who would do so.
How shocking to discover that there was already a company who had signed a sales agreement, paid over the 10% deposit, as well as paid salaries and salaries owing from the previous owner of SFI! Pelangi Prestasi signed an SPA in 2018 to purchase SFI from the struggling Indian company, Ballarpur Industries for RM1.2billion, on the expectation that SFI would secure new timber licenses.
But what happened instead? No new timber licenses were issued by the Warisan government to Pelangi Prestasi when it took over Sabah. No reason was given. To add insult to injury, a new set of preconditions – not part of the original sales agreement – was given to Pelangi Prestasi by the state government before they would be even considered for new timber licenses. Meanwhile, Grant Thornton allegedly went behind Pelangi Prestasi’s sales agreement to find a new buyer, bringing in the unsuspecting Lee & Man Paper from China. In the meantime, SFI remained out of commission, its employees merely coming in to ‘punch card’ every day.
After that sordid roundup, it comes as no surprise that whoever is calling the shots for SFI right now went to the Sabah Development Bank Berhad (SDBB) for a loan. SDBB is a wholly state-owned financial institution, meant to encourage the economic development of Sabah – infrastructure and public projects, mainly. But here it is, being used in what we could say is a frivolous affair.
Let us put aside the fact that there is a ready buyer with more than enough financial capability to support SFI. Say now SFI, on top of its general lack of profits, also has a RM98million loan on its head. Does this debt now belong to the next buyer? If there is no buyer, will there be another loan taken out? Who will be repaying this loan? In its current state, it won’t be SFI. The next in line to take over the company will also be next in line for the debt from these loans.
And if not, will the state be absorbing these debts? Why would they waste development money that way, when there are far more pressing issues that RM98million could help with in Sabah? Development in rural areas, providing running water, reliable electricity, smooth roads, better community facilities, encouraging small-scale entrepreneurship in villages – all of these could benefit the overall livelihood of Sabahans, rather than trying to cover up a single mistake made by the state government in the first place. There is no way this action of taking loans to shore up the lack of funds is sustainable – but perhaps those involved only need it to seem sustainable until the next unknowing investor is found to take on all the liabilities.