KUCHING, Nov 13 — Chief Minister Datuk Patinggi Abang Johari Openg today said that the state government will pursue alternative financing initiatives as the conventional financing model is no longer a viable option.
He said the state government has to be creative and develop a new mechanism and explore unchartered waters, if necessary, to come up with alternative financing initiatives.
“We have to look for other financing models that can help achieve our development goals, particularly in the area of physical infrastructure and amenities,” he said in his winding-up debate speech during the Sarawak State Legislative Assembly here.
He said Opposition members should not hastily jump into conclusion that the alternative financing model the Sarawak government adopted is similar to 1MDB, without fully understanding how it works and the benefits derived from it.
“It saddens me that ignorance of some Opposition members is blurring the good intention of the state government in solving everyday problems faced by our people,” Abang Johari, who is also the Finance and Economic Planning Minister, said.
He said the state government will not touch the reserves to meet potential shortfall in the state Budget, adding that the state government can alternatively tap into funding provided by Development Bank of Sarawak (DBoS), a bank which is fully owned by Sarawak.
“Securing financing facilities for long-dated financing from DBoS to finance socio-economically important projects such as water supply, power supply, roads and bridges as well as other sectors such as digital economy, tourism and convention infrastructure, oil and gas and agriculture, will provide the state with a competitive rate, long tenure and limited recourse.
“It is worthwhile to note that, like conventional loan repayment terms, the financing repayments to DBoS will be on staggered repayment terms spread over a periodic number of years, based on the duration of project implementation, as opposed to lump-sum or bullet payment as some might think.
“The financial provisions for these progress payments will be provided for in our normal annual budget,” he added.
He said it is most regrettable that Kota Sentosa State Assemblyman Chong Chieng Jen, a Sarawakian, a deputy minister in the federal government, had bluntly made a misleading statement on the state’s sincere initiatives to obtain funding from other legitimate means.
He said it is totally unwarranted for Chong to equate the state alternative financing initiative, which has been practised by many countries in the world including Malaysia, to that of 1MDB.
“He should be well aware of the simple fact that 1MDB’s businesses and financial structures are clearly operated on a different platform and objective altogether.
“1MDB is a corporation with the business model of buying and investing in strategic assets without having a strong balance sheet and cash flow, requiring a guarantee from the Federal Government to support its huge borrowings activities.
“If we are to apply this unsubstantiated argument of Kota Sentosa, then we can claim that Pakatan Harapan (PH) government’s financing model is similar to 1MDB’s in the making because the PH government is using its Special Purpose Vehicles (SPVs), such as Dana Infra Nasional Berhad to finance its big and mega infrastructure projects.
“Also recently, the PH government has issued a Samurai Bond of ¥200-billion equivalent to RM8 billion,” he said.