PETALING JAYA: The Sarawak government has been urged to provide greater disclosure and accountability on the management of the planned state-owned Development Bank of Sarawak (DBOS) announced this week.
Kelvin Yii, the special assistant to Sarawak DAP chairman Chong Chieng Jen, said the initiative should not be turned into a “personal ATM” for those in power and companies that may have high political connections.
Yii said there are risks associated with state-owned development banks as they are politically-controlled and generally run by non-elected government officials.
He pointed to a World Bank report in 2001 which cautioned that “these banks are run by bureaucrats who pursue personal and political gain, leading to sub-optimal performances”.
“This will then run the risk of misallocations of funds, namely to politically-connected industrialist (so-called crony capitalism) for personal political gains or profits by people in power from these crony deals,” he said in a statement today.
“This means that these development loans may only benefit the large companies which are politically connected.”
On April 4, Sarawak Chief Minister Abang Johari Openg announced Bank Negara’s approval for the state government to set up the new bank.
He said it would provide capital or funds for high-impact projects to further develop the state.
In particular, it would be operated on a financial model that helps fund strategic projects in line with the state’s socio-economic transformation catch-up plan (2017-2030), he added.
Yii said DBOS may end up not taking care of small and medium-sized companies who represent the majority of the companies in the state and which are actually the ones that have difficulty raising money.
“This will again result in the further widening of the gap between the rich and the poor in the state,” he added.
He said unethical practices, such as the giving of approval for strategic projects without any open tender in return for political campaign funding, need to be avoided.
“This was already allegedly happening rampantly in the state,” he added.
He said such practices would lead to higher costs to the government and ultimately to the people of the state.
Yii stressed that an initiative such as this to better fund strategic projects to promote socio-economic transformation in Sarawak is welcome.
The state government however, needs to set in place a systematic and transparent system to ensure sound and prudent management, audit and banking governance, to safeguard and avoid abuses of its financial resources and reserves.