Kota Kinabalu: State-linked oil and gas arm SMJ Energy holds assets valued at about RM4.9bil and has had its long-term AAA credit rating reaffirmed, as the state pushes ahead with major energy investments while reviewing its sales tax policy.
Finance Minister Datuk Seri Masidi Manjun, in his winding-up speech in the Sabah Legislative Assembly, said Rating Agency Malaysia (RAM) had reaffirmed SMJ Energy’s long-term AAA rating, supported by stable financial projections and a rated capacity of up to RM10bil.
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“This reflects strong financial credibility for investors and demonstrates that SMJ Energy is capable of meeting all of its financial obligations,” he said.
Masidi said the estimated RM4.9bil asset valuation was based on the company’s equity holdings, including a 50pc stake in the Semarang Production Sharing Contract valued at RM1.4bil, equity stakes of 25pc in Petronas Chemical Fertilizer Sabah and 10pc in Petronas LNG-9 with a combined estimated value of RM2.4bil, and 100pc ownership of Sabah International Petroleum (SIP) valued at RM1.1bil.
Sabah International Petroleum operates production assets including an FPSO (Floating Production Storage and Offloading) vessel and an FSO (Floating Storage and Offloading) unit.
Clarifying the figures, Masidi said asset valuation should not be confused with revenue generated from oil sales.
“For example, our 50pc stake in Semarang is valued at RM1.4bil — that is not my product. We have already sold oil worth RM1.9bil. This figure refers only to the value of our equity,” he said.
Masidi said Sabah had also secured a 25pc equity stake in Petronas FLNG-3 through a definitive agreement signed on Oct 31, 2025.
The USD3.1bil floating liquefied natural gas facility, to be located at the Sabah Oil and Gas Industrial Park, has a planned production capacity of two million tonnes per annum and is expected to begin commercial operations in mid-2027.
He added that a Head of Agreement was signed on Nov 28 for the North Sabah Enhanced Oil Recovery project under the North Sabah Production Contract, involving the recovery of a 20pc participating interest, with the agreement expected to be finalised in early 2026.
On state fiscal policy, Masidi said Sabah was reviewing its state sales tax framework through technical committees and structured engagement with taxpayers to better understand industry operations, following concerns over the impact of taxes and penalties on businesses, particularly in aquaculture and downstream seafood processing.
“In this regard, a review of the state sales tax policy is currently being carried out carefully with the relevant agencies through a technical committee and engagement sessions with taxpayers, to better understand the operational realities of the industry and to ensure that government policies remain responsive to current economic needs,” he said.
Masidi said fish sold for local consumption in Sabah was not taxed and that the export levy was intended to encourage downstream industries.
“The reason we impose tax on exports is to encourage downstream industries. If the fish is used solely for the state, there is no tax,” he said.
On state-linked revenue outcomes, Masidi said Sabah had received RM266mil so far from Sabah International Petroleum and was expected to receive RM151mil next year after the company cleared its debts.
“So far, we have received RM266mil from SIP, and next year we expect to receive RM151mil. This is running well after all the debts have been paid off,” he said.
When asked about non-performing loans at Sabah Development Bank, Masidi said legal action had been taken against all parties involved and recovery efforts were ongoing.
“We have issued summonses to all involved, and no one is exempted from legal action. So far, if I am not mistaken, we have recovered around RM650mil,” he said, adding that the process was challenging.
“It is difficult, but it is not impossible,” he said.
Masidi also reiterated that Sabah’s 40pc revenue entitlement under the Federal Constitution was crucial to addressing long-standing infrastructure and basic needs gaps in the state.
“With the 40pc, we can address many of these problems. Without the 40%, to be honest with you, we may change ministers, but the problems may still not be resolved because the needs are simply too great,” he said.
He stressed that the entitlement should not be compromised.
“The 40pc is guaranteed by the Constitution, and it should be paid as it is,” he said.
