Sarawak to decide fate of SOEs through Budget 2027

KUCHING: The fate of Sarawak’s state-owned enterprises (SOEs) that no longer serve a purpose or hold strategic value will be determined through the direction and decisions outlined in the Sarawak 2027 Budget, says Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg.

However, he remained tight-lipped on whether the state government had identified the number of SOEs that might no longer receive government funding, saying the matter should be left until the budget is tabled.

“It is the same as what I explained earlier. That is the policy direction. Wait for the Budget; it has not been tabled yet,” he told reporters here after officiating at the Sarawak SOEs Transformation Programme: A Pledge for Good Governance, High Performance and Value Creation Phase 2 today (Sept 22).

He was responding to a question on whether the state government had identified several SOEs that could potentially have their government funding injections discontinued ahead of the Sarawak 2027 Budget.

Abang Johari earlier explained that developments concerning SOE transformation should be viewed based on the policy direction set by the state government.

In his keynote address, he said Sarawak is prepared to consider the consolidation, merger and restructuring of several SOEs to ensure the state’s structures and assets could generate greater value.

He said the Phase 2 study of the Sarawak SOE Transformation Programme had identified several possibilities, including consolidation, mergers, improvements and the refocusing of certain entities.

Among the matters being considered, he said, is the consolidation of several port authorities under the Sarawak Ports Authority (SARPA).

“This is an initial consideration. It requires feasibility studies, due diligence and careful assessment.

“Such steps need to be taken when there are overlapping mandates, duplicated functions or structures that are no longer effective in meeting current needs,” he said.

Elaborating, he said subsidiaries and investments needed to have clear strategic justification, whether to support the parent company’s mandate, create value, provide specific capabilities or open up strategic opportunities.

“If the existing structure is the best, strengthen it. If it can be improved, improve it. If two organisations can create greater value by working together, bring them together. If an organisation needs to return to its core mandate, refocus on it,” he said.

He said decisions concerning SOE structures should not be made based on sentiment, but should instead be guided by the long-term interests of each entity and Sarawak as a whole.

“This is not restructuring for the sake of restructuring. It is about creating greater value from the assets and investments of the State Government,” he added.

Abang Johari said the study had also identified inactive, non-operational and underperforming subsidiaries that required attention.

He said an entity should not continue to be maintained simply because it had served a purpose in the past.

He said portfolio rationalisation did not mean merely downsizing organisations, but would instead allow capital and talent to be channelled towards areas with genuine competitive advantages.

Meanwhile, Abang Johari said SOE transformation could not be carried out in isolation as several issues identified are beyond the control of individual entities, including policies and regulations, inter-agency coordination, financing, infrastructure and market constraints.

As an example, he said the regulatory fees imposed by the Sarawak Rivers Board (SRB) had not been reviewed for more than 30 years, making it necessary for the relevant framework to evolve if the entity is to strengthen its revenue and financial sustainability.

He said a similar approach is needed in other sectors, with ministries, State agencies and SOEs working together to address issues that extended beyond the jurisdiction of individual entities.

Also present were Deputy Premiers Datuk Amar Douglas Uggah Embas and Datuk Amar Dr Sim Kui Hian; ministers, deputy ministers and State assemblymen; State Secretary Datuk Amar Abu Bakar Marzuki; State Financial Secretary Datuk Dr Seri Wan Lizozman Wan Omar; Tribune Press Sdn Bhd and SV News Sdn Bhd chairman Datuk Seri Azman Ujang; Tribune Press Sdn Bhd and SV News Sdn Bhd chief executive officer Datuk Dr Jeniri Amir; and other distinguished guests.