KOTA KINABALU: Former chief minister Yong Teck Lee has warned that the legal tussle involving the Sabah government over the purchase of timber concessionaire Sabah Forest Industries (SFI) Sdn Bhd may spook investors’ confidence in the state.
He said the SFI issue, which has been ongoing for a year now, would scare away potential investors whom the state government has been seeking to attract.
“How can potential investors such as Ikea be confident that their investments in Sabah will not face the same messy fate as the SFI investors?
“Foreign investors are especially nervous about uncertainties, lack of transparency and weak rule of law,” he said in a statement last night.
Yong, who is president of the Sabah Progressive Party, said on one hand the state government is promoting raw materials such as timber as the key attraction for foreign wood-based investors.
But on the other hand, he said, the same government had reportedly refused to issue timber licences to a major wood-based investor in Sabah.
“As a result, the Sabah government has got itself mired in a legal tussle with the investor, a Malaysian conglomerate in the biggest wood-based manufacturer in Sabah, namely SFI,” he said.
He was referring to a report by StarBizWeek of a legal tussle between the Warisan-led state government, SFI, SFI’s receiver and manager Grant Thornton Consulting Sdn Bhd, and Pelangi Sdn Bhd, a company related to local tycoon Syed Mokhtar Albukhary.
China pulp and paper company Lee & Man Paper Manufacturing Ltd is also involved in the suit.
StarBizWeek had based its report on legal papers sighted, related to a civil suit against the parties and a judicial review application against Sabah Chief Minister Shafie Apdal and the state government, brought by Pelangi Prestasi.
Pelangi Prestasi inked an agreement to purchase SFI in 2018. However, the state government decided not to grant the company new timber licences following the May 9 election. It also established a new set of prerequisites for the issue of such licences.
Quoting media reports, Yong said the investor had already paid a deposit of RM120 million for the takeover of SFI, which was facing financial difficulties. But now denied access to raw materials, he added, the investor stood to lose a lot of money.
“Uncertainties in government policies can kill private sector sentiments,” he said, giving another example of the ban on plantation log exports which, according to him, was said to have led to a RM91 million suit against the Sabah government by a private company.
“The Sabah government should heed the advice of eminent businessman Daim Zainuddin, who expressed dismay at how public statements by federal ministers have damaged business confidence in the economy and even caused the ringgit to fall in value.
“Similarly, the legal tussle over SFI will likely spook investors. Potential investors in Sabah will view the SFI legal tussle with great concern because such litigation is bad news for investors,” he said.