Premier: Underperforming SOEs may be merged, privatised or shut down

Datuk Patinggi Tan Sri Abang Johari Tun Openg. Photo credit: Sarawak Information Department (Japen)

By Shikin Louis

KUCHING, June 11: Sarawak will undertake a comprehensive review of its State-owned enterprises (SOEs) and broader State investment portfolio, with mergers, restructuring, privatisation and even closures among the options being considered to strengthen performance, eliminate inefficiencies and maximise value for the State.

Premier of Sarawak, Datuk Patinggi Tan Sri Abang Johari Tun Openg, said the exercise will assess whether each SOE remains fit for purpose, performs effectively and is financially sustainable amid Sarawak’s push to build stronger and more self-reliant State-linked entities.

“Where SOEs are no longer delivering value, we must have the courage to make difficult decisions — whether through restructuring, consolidation, divestment or, where necessary, closure.

“The objective is not to reduce numbers. The objective is to build stronger, more focused and more effective entities that are capable of delivering results,” he said when speaking at the launch of the Sarawak SOEs Transformation Programme: A Pledge for Good Governance, High Performance and Value Creation broadcast live by Sarawak Public Communication Unit (UKAS) on Facebook today.

Abang Johari revealed that 30 companies have been identified as dormant, with some remaining inactive for many years and others lacking clear justification for their continued existence.

At the same time, he said 18 government-linked companies (GLCs) recorded profits but have yet to declare dividends to the State.

“These are issues that cannot be ignored. Public resources are limited and must be utilised responsibly. Every entity must have a clear purpose and a clear mandate,” he stressed.

The Premier further said the review, to be undertaken by the Sarawak Financial Secretary’s Office, will examine the entire SOE ecosystem and broader State investment portfolio to ensure Sarawak is extracting maximum value from every asset, investment and company under its ownership.

“Over time, multiple entities have been established across different sectors and industries. While many have contributed significantly to Sarawak’s development, some could be operating in overlapping spaces, creating duplication, fragmentation and inefficiencies,” he added.

As part of broader reforms, the Sarawak government has also approved the Sarawak State Ownership Policy (Sarawak SOP), which establishes a clearer framework defining the State’s role as owner, expectations of SOEs and standards for performance and accountability.

Complementing the Sarawak SOP is the Sarawak Code of Corporate Governance for State-Owned Enterprises which sets out clear governance expectations for Boards and Management, based on the principle of “comply or explain”.

Abang Johari also said the State is reviewing the Statutory Bodies (Financial and Accounting Procedure) Ordinance 1995 and studying the possibility of introducing a broader legal and regulatory framework to strengthen SOE governance, accountability and monitoring systems, with support and advice from the World Bank.

“Complementing these initiatives, I would like to commend State Financial Secretary’s Office for producing three (3) handbooks for our SOEs — the Board Effectiveness Handbook, the Performance Management Handbook, and the Leadership Development Handbook.

“These handbooks will give your teams the practical tools and guidelines to govern, manage, and lead more effectively,” he said.

He added that Sarawak would benchmark itself against successful global models such as Temasek Holdings in Singapore, Mubadala Investment Company in United Arab Emirates and Khazanah Nasional, which have demonstrated how professional ownership structures can strengthen value creation while supporting national and regional development objectives.

Today’s programme marked Phase 1 of the SOE transformation initiative, covering 36 entities comprising 17 statutory bodies and 19 GLCs. A second phase is expected to involve the remaining SOEs identified as strategically important to Sarawak’s future development. — DayakDaily