Masidi’s best Christmas present for Sabah

Published on: Sunday, December 10, 2023

By: Datuk John Lo

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Sabah finance minister Datuk Seri Masidi Manjun

BRAVO to Masidi’s unequivocal winding up speech on GLCs in DUN.

I want to quote from the late Roslyn Carter, wife of President Jimmy Carter as a start of my article.

“A leader takes people where they want to go. A GREAT LEADER takes people where they don’t necessarily want to go, but ought to be”. Deng Xaio Ping and Lee Kuan Yew are such leaders.

I must say “thank you” to DSP Masidi for his forthright winding up statement on GLCs in the Legislative Assembly. At long last, Sabah may see the beginning of the end of the 40-year costly GLC saga.

For decades, Sabahans have looked at the government with no hope at the poor/mismanagement and massive financial leakages in the GLCs. Hajiji and Masidi have spoken many times on the grossly unsatisfactory situation of GLCs in recent months.

Masidi’s wish to put some sense, purpose and above all, discipline, into the non-performing GLCs is GROUND BREAKING, politically very brave and is like a breath of fresh air in spring. His action is the most impactful decision in years.

It is the dawn of a new era when Sabahans can begin to have faith in the government again, that it will look after their economic interest rather than panting for political/personal self-interest of politicians. If implemented with the [1] right principles. [2] by the right people and [3] supported by an effective system, his action will bring numerous substantive benefits for all Sabahans.

This is the birth of genuine economic leadership.

Thank you, DSP Masidi, for your best 2024 Christmas gift for Sabahans.

https://www.dailyexpress.com.my/news/224595/only-qualified-to-sit-on-boards-new-measures-next-year-to-ensure-glcs-perform/

Sabah Government could have been bankrupt if it is in business.

[1] Imagine that the Sabah Government, burdened by 240 non-performing GCs, is in the business of making money and having to compete?

[2] Imagine the reality that the Sabah Government is being burdened with more than 240 GLCs with non-performing Chairmen and Boards of Directors. Only 10 GLCs are capable of delivering some dividends?

[3] Imagine the Sabah Government has to raise capital or bank loans for its business? Where would it get the capital or which bank would be silly to provide loans to the Sabah Government for keep the GLCs afloat? Many GLCs have taken loans from SDB. These loans have turned bad for years.

[4] Imagine that Sabah Government has shareholders, would the shareholders continue to vote for the Sabah Government with its poor management track records in GLCs?

[5] Imagine how many of these GLCs can justify its existence with years of losses?

The simple answers to these and many other related questions would be a BIG NO.

With the perpetual losses in GLCs, the Sabah Government would have gone into bankruptcy and liquidation long ago. The only reasons that it hasn’t is because it has the legal rights to levy tax from natural resources like oil and gas, oil palm, land and Sabahans.

But remember, the money used to cover up, to conceal these GLC losses and the assets wasted could and should have been used to improve Sabahans’ standard of living.

Hajiji has expressed his disappointment with the dismay performance many times.

Too late to say that Sabah Government has no business to be in business.

Only Singapore and China have managed their GLCs profitably and competitively in the real world. Singapore has some very outstanding GLCs like Singapore Airline and DBS.

China has a few top 10 banks in the world, GLCs in railways, infrastructure/construction. Many of them are MNCs and listed with tens of billions in market capitalization. Some are even on the fortune 500 list. Most other nations, including Malaysia and Sabah, have most of their GLCs that are badly mismanaged.

MAS is prime example. Some GLCs are barely profitable simply because of the special treatments, monopolistic privileges and concessions from the Government. Petronas is a good example of a GLC which have “prospered” on the largesse of oil and gas natural resources and at the expense of Sabah and to a lesser extent, Sarawak.

Can Petronas survive like Shell, EXXON Mobile and China Petroleum?

Yes, it is too late to say that Government has no business to be in business. The Sabah Government and worse, the Federal Government have already sunk into a GLC deep mud pit. Extracting themselves out will be almost impossible.

With only 10 able to delivery dividends, Sabah Government has about 240 non-performing GLCs. The Federal Government must have thousands!

Only progressive leaders with economic leadership quality can save Sabah from bleeding to financial bankruptcy.

Hope the following suggestions are helpful for Sabah to extricate from the GLC quagmire.

[1] Recognition of the complexity of managing more than 250 GLCs, most of which are badly managed, is a good starting point. This Hajiji and Masidi have already done.

[2] Introduce policies, rules and system of monitoring and control at macro and micro levels to manage all the GLCs. This is work in progress.

[3] Form a very high power “Supervisory Committee” comprising of senior officials, private sector players and professionals. This committee should be under the Minister of Finance.

[3] All GLCs must a strong Board with chairmen/directors of integrity and suitable qualifications. This is work in progress. Likewise, on the appointment of CEOs who must have the suitable proficiency.

[4] Clearly separate the functions of Government as the ultimate regulator/arbitrator from GLCs. Fundamentally, there is already conflict of interests for the Government to play 2 conflicting roles in the GLCs.

[5] GLCs which have been given monopolistic positions should be very closely supervised. E.g. Cement Industry, Suria Capital.

[6] The performance of GLCs which are in “normal” business, must be compared and judged by peer performance. E.g. Sawit Kinabalu vs IOI and other oil palm majors, SUDC vs best property development companies.

[7] GLCs should pioneer into new, innovative areas. Not to compete in established sectors like property development and tourism against the private sectors. They should not fight with or operate at the expense of Sabahan businessmen.

[8] GLCs must stop signing “shady business deals”.

Mixing politics with GLC appointments is a BIG NO NO.

The appalling position of the Sabah’s GLCs has been caused by excessive political expediency, “abang adek” political accommodations and in many cases, the glaring absence of professionalism by those entrusted to manage.

The biggest issues are the lack of accountability and numerous failures in fiduciary duties by the chairmen and boards of directors. GLC appointments are being seen as opportunity to feather one’s nest, not to serve Sabah’s interest.

At the apex is the problem of an ineffective overall supervisory system and control which have allowed many chairmen and board to act irresponsibly in the past. It is good that Masidi will focus on this fundamental aspect.

There are some responsible political leaders and officials.

It is not true that there are no good, suitable political leaders and officers who can manage the GLCs. I have said it and will say it again and again. There are many such Sabahans if only they are given the chance to serve.

The challenge is NOT to play politics and politicking, focus on economic leadership and management of the economy, serious attention to grow the economy. Innoprise, Suria Capital, Sabah Credit Corporation, Sabah Energy, SMJ, Desa Plus are examples of having good management standard. Good progress in turn around cases are SOGIT and SDB.

With responsible chairmen and competent managements, these GLCs have great potentials to grow and contribute to Sabah’s economy.

Turning around Sabah’s GLCs.

Turning around more than 200 GLCs at one time is nigh impossible. Best way is to choose 10 biggest and worst GLCs to be turned around. To keep out political considerations, these 10 bad GLCs should be selected by a committee comprising of senior officials, reputable businessmen and professionals using preset criteria.

This turn-around, if successful, can be used on the rest of the GLCs.

Why focus on turning around non-performing GLCs?

The reasons are simple.

[1] After carrying the burden of the loss making GLCs for almost 40years, Sabahans have had enough. Enough is enough.

[2] For years, the financial losses in GLCs have run into billions and are one of the causes for Sabah’s downfall from top No.2 to the bottom state in Malaysia.

[3] Huge resources including valuable commercial land and profitable business which could have boosted Sabah’s economy, have disappeared or disposed of in the context of JV. Better watch out, this is still going on.

[4] The debts that GLCs have incurred are into billions. They owe a lot of money to SDB and the Sabah Government. These should be classified as non-performing loans long time ago. The money could have been channelled to other productive sectors

[5] Last and most important, if the Hajiji and Masidi team can solve the GLC problems, they will be able to solve most of, if not all, Sabah’s other economic problems. Their success will restore the economic pride and confidence of Sabahans.

The future of Sabah starts with sorting out the non-performing GLCs. I think Hajiji and Masidi can do it. Let us give them all the encouragement and support!

- The views expressed here are the views of the writer Datuk John Lo and do not necessarily reflect those of the Daily Express.

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