In a news report recently, Minister of Agriculture & Food Industry, Datuk Junz Wong announced that the Sabah Government plans to increase its stake to 30% from 2% in Sabah Forest Industries Sdn Bhd (SFI).
Some disturbing questions have arisen since the news broke.
Based on data acquired from a Warisan-blocked sale agreement of 98% equity in SFI for RM1.2 billion, the state government needs to fork-out approximately RM343million for a 28% stake in SFI (to increase its stake to 30%).
- Why is the government willing to invest RM343 million in a private company? Is this in accordance with state policies? Was any due diligence done?
First, such a transaction seems odd because it is deemed ‘government intervention’ in private sector affairs.
Second, the state government’s investment in SFI would be termed ‘high risk’ given the poor performance and track record of SFI. Wsa any due diligence conducted by the state to justify its investment?
The Lion Group incurred losses from its SFI venture. Similarly, when Ballarpur Industries acquired the 98% stake in the company for RM991million in 2007, it too financial losses due to failing pulp and paper business.
Ballarpur had planned to sell-off its stake in 2018 to Pelangi Prestasi for RM1.2billion. But this sale is being blocked by the Warisan government apparently because it (government) has its own plans to increase its stake in SFI.
This is dangerous and the state government stands the risk of losing its investment in the loss-making SFI.
- Wouldn’t the RM343 million be put to better use to improve basic infrastructure and amenities for the people of Sabah?
- Where is Shafie getting the RM343 million to invest in SFI?
The state doesn’t have the funds. Does it plan to take a loan, which would increase the state’s debt which is estimated at RM4.0 billion? Will the Government ‘dip’ into the RM98 million unsecured loan approved by the Shafie as finance minister to acquire the SFI stake?
Will the Sabah government borrow from Lee & Man Paper Manufacturing Ltd to finance its portion of the stake in return for a sweet trade-off? How will the government make the monthly repayments?
These are disturbing questions. The bottom-line is the Warisan government should not invest in SFI because of the high financial risk and lack of due diligence.
More importantly, there are no guarantees that the SFI’s pulp and paper and timber business will succeed – especially after the failed attempts by the Lion Group and Ballarpur Industries.
On a separate note, Shafie Apdal has been pleading from the Prime Minister, Tun Mahathir for development funds, saying Sabah needs funds for economic development. He makes it sound almost genuine.
And yet, he is willing to risk investing RM343 million in a private company that has only shown losses and poor performance. Does Shafie know the financial risks involved?
Why should Dr M approve Shafie’s request for the Sabah development funds when he (Shafie) has been acting irresponsibly?
When Shafie Apdal, Junz Wong or other cabinet members behave in a suspicious manner, it creates doubts in peoples’ minds. People will lose trust and confidence, and if this is lost, then Warisan is lost!
The MACC chief’s suggestion to place a senior officer in the chief minister’s office must be applauded to deter corrupt practices. Emphasis should be placed on the government’s business transactions and launch investigations where appropriate.
These irresponsible actions have been going on at the expense of Sabahans for far too long!