SARAWAK Chief Minister Abang Johari Openg has dismissed opposition claims that the state’s proposed alternative financing plan by going to the state-owned Development Bank of Sarawak (DBoS) to meet its development goals is another 1MDB in the making.

The chief minister said if Pakatan Harapan’s Kota Sentosa assemblyman Chong Chieng Jen can claim the model is similar to scandal-plagued strategic investment firm, then the Sarawak government could also claim the PH federal government’s use of a special purpose vehicles such as Dana Infra Nasional Bhd and the issuance of RM8 billion in Samurai bond to finance infrastructure projects are also similar to 1MDB.

“It saddens me that ignorance of some honourable members is blurring the good intention of the government in solving the everyday problems faced by our people,” he said in the state assembly this afternoon.

The chief minister said assemblymen should not jump to conclusions that the Sarawak government alternative financing model is similar to 1MDB, without understanding it. 

“Due to the many competing demands for our financial resources, conventional financing models are no longer a viable option,” he told the legislature.

He told the assembly that for the state to meet potential shortfall in the state’s budget without dipping into its reserve, the state could alternatively tap into funding provided by DBoS.

Securing financing facilities for long-dated financing from DBoS to finance development will provide the state with competitive rate, long tenure and limited recourse, he said.

He said like conventional loan terms, repayments to DBoS would be “on staggered ... terms spread over a periodic number of years, based on the duration of projects implementation”.

He said it would not be a lump-sum or bullet payment and the financial provisions for these progress payments would be provided for in the state’s normal annual budget.

The chief minister also said the bank has also put in place its risk governance and other policies in accordance with Bank Negara Malaysia (BNM) regulations.

“The bank’s prudential ratio, such as capital adequacy ratio, is a ratio of a bank’s capital in relation to its weighted assets and current liabilities.

“In giving out financing, DBoS is strictly adhering to its capital adequacy ratio that provides guidelines preventing DBoS from taking excess leverage and becoming insolvent when crisis arises.

“DBoS submits its financial report to BNM and federal Ministry of Housing and Local government on a yearly basis.”

The broadening of the state’s present revenue base, he said, would strengthen the state’s financial capacity, and support the state to achieve a budget surplus in many years to come.

Abang Johari said it is not the policy of the state government to guarantee to fund raising exercise, unlike what the federal government practised.

He also said the alternative funding would only be sought “when in need and when there is a capacity to repay and most importantly, borrowing only for strategic and productive purposes and not for financing of operation expenditure”.

“Leveraging on alternative financing initiative is a sustainable platform to adopt to facilitate and expedite the realisation of the state development agenda under the 5-year Malaysia Plan.”

He slammed Chong, who is also the leader of the opposition, for making “misleading statements and allegations” on the state’s “sincere initiatives” to obtain funding from other legitimate means.

Alternative financing initiative, he said, has been practised by many countries, including Malaysia.

“In order to be on a par with other more developed states in Malaysia, Sarawak still has to build the much-needed physical infrastructure and amenities throughout the state.” – November 13, 2019.