SAPP: Explain the RM 601 loan to KL company

Kota Kinabalu, Mar 15, 2009: Sabah Progressive Party (SAPP) said the State Government owes the people of Sabah an explanation why a RM 601 million loan was given by the Sabah Development Bank (SDB) to a KL company to develop luxury condominium in Kuala Lumpur's Ampang. As reported in the business section of a national newspaper Thursday, a property developer, Perspektif Masa Sdn. Bhd., has secured a RM 601 million loan from SDB to finance their RM 1.5 billion project in Ampang.

SAPP president, Datuk Yong Teck Lee added that this loan being one of the biggest loans ever granted by SDB is sure to raise eyebrows.

"It is equivalent to the RM 600 million in infrastructure grants allocated to the State of Sabah under the second stimulus plan for these two years. Such a huge loan, if disbursed in Sabah, would have been a huge stimulus to the Sabah economy. Instead, the wholly Sabah Government-owned bank has seen it fit to lend the money to KL as though Sabah has no need of any investment funds. The local business community knows that banks have been very tight in lending money these days because of the global financial crisis. But the SDB seems not to know or care.

"Therefore, SDB should disclose whether such a huge loan outside Sabah has obtained the approval of the State Government. The people of Sabah deserve to know whether SDB has departed from its primary role as the leading financial institution (DFI) to promote the growth of the Sabah economy.

"According to the Sabah Chief Minister, who is also the Finance Minister overseeing SDB, Sabah has many attractive investment projects created under the Sabah Development Corridor. Don't these corridor projects need financing?

"Or is it because our own Sabah Development Bank has lost confidence in the Sabah economy? Are there no projects in Sabah that are viable to qualify for SDB loans? Are there no more projects that can be profitable for SDB to lend to?

"SDB and State officials must not underestimate the potential for loss of investor confidence when investors see that Sabah's own development financial institution has decided to channel a huge chunk of its loan portfolio to non-Sabah projects.

"Already, there is widespread concern over the untimely closure of the ceramic tile factory in Labuan this month caused by the hike in natural gas prices sold by the Sabah Energy Corporation (SEC) to a SEDCO subsidiary, Guocera Tiles Industries (Labuan) Sdn. Bhd. SEDCO (Sabah Economic Development Corporation) is a State Bumiputra agency dedicated to develop Sabah's industrial development. In spite of the wide media coverage of the controversial closure of the Labuan tile plant, none of the State government Ministers or officials have bothered to explain or show any concern over the matter. Other than losing jobs, the plant closure also affects investor confidence. In Sarawak, Penang and other states, news of similar factory closures are promptly attended to by senior ministers. Here in Sabah and Labuan, senior leaders do not seem to care." said Yong.