SOE reforms could save Sarawak RM403 mln in grants by 2030, cut govt loan balances to RM1.7b

Abang Johari speaks as a presentation slide highlights projected outcomes of the Sarawak SOEs Transformation Programme, including RM403 million in operating grant savings and government loan balances declining to RM1.7 billion by 2030. Screenshot taken from UKAS livestream on Facebook.

By Shikin Louis

KUCHING, June 11: Sarawak’s State-owned enterprise (SOE) transformation programme is projected to reduce operating grant requirements by approximately RM403 million by 2030, while strengthening the financial sustainability of State-linked entities and generating higher returns for the State.

Premier of Sarawak, Datuk Patinggi Tan Sri Abang Johari Tun Openg, said the projected savings would enable the State government to redirect more resources towards development priorities such as roads, schools and infrastructure projects that benefit Sarawakians.

“By 2030, the implementation of this transformation programme by our SOEs is projected to reduce operating grant requirements by approximately RM403 million.

“RM403 million. That is money that can be redirected — to rural roads upgrading, to school repairs, and to infrastructure development that opens up economic opportunities in every corner of Sarawak,” he said during 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 further said assessment on 36 entities comprising 17 statutory bodies and 19 government-linked companies (GLCs) showed that many statutory bodies remain heavily dependent on government support, with grants accounting for about one-third of their total income and around 44 per cent of their operating expenditure funded through operating grants.

“Nearly half of the cost of operating some of these entities continues to be funded by public resources. This is not merely a financial issue. It is a question of stewardship and accountability,” he said.

However, he stressed that the challenges identified are not beyond remedy and that stronger financial management, disciplined execution and a willingness to embrace a “business unusual” approach could significantly improve the performance of SOEs.

Apart from reducing reliance on grants, the Premier said existing government loan balances are projected to decline substantially to approximately RM1.7 billion by 2030 through stronger financial performance and loan restructuring initiatives.

At the same time, dividend contributions from commercial GLCs are expected to be more than double as profitability improves.

“These outcomes will strengthen both the financial sustainability of our SOEs and the fiscal position of the State, creating greater capacity to invest in future development priorities,” he said.

He also said based on targets established under the SOE Blueprint Study, 21 of the 36 entities assessed under the first phase of the transformation programme are expected to achieve financial self-reliance by 2030 and beyond.

“Another 10 entities are expected to significantly reduce their dependency on operating grants and become only partially reliant on government support,” he added.

Abang Johari also called on profitable State-linked entities to contribute more meaningfully to Sarawak’s development through higher dividend payments.

“For profitable GLCs, dividend contributions should not be viewed merely as a compliance requirement.

“They are a return to the people of Sarawak and a contribution towards funding roads, schools, welfare assistance, rural development and future investments,” he said.

He urged profitable entities not to limit themselves to minimum dividend payouts when they are in a position to contribute more.

Abang Johari also revealed that the State government will introduce a clearer framework to enable profitable statutory bodies with healthy financial surpluses to contribute cash returns to the State, a move aimed at broadening Sarawak’s revenue base and strengthening financial discipline.

He also noted encouraging signs of progress, with companies under the State Financial Secretary recording an almost 58 per cent increase in dividend declarations between 2023 and 2024, while the number of statutory body-linked companies declaring dividends rose by 44 per cent over the same period.

Today’s programme marked Phase 1 of the SOE transformation initiative, involving 36 entities comprising 17 statutory bodies and 19 GLCs. — DayakDaily