In his winding-up speech at the state assembly today, he said the state needed to pursue an alternative financing initiative as conventional financing models are no longer viable.
“We have to look for other financing models that can help achieve our development goals, particularly in the area of physical infrastructure and amenities,” he said.
The alternative financing initiative, he said, would see the state tapping into funding provided by Development Bank of Sarawak (DBoS), which is fully owned by Sarawak, without touching state reserves.
The state could obtain financing at competitive rates, long tenures and with limited recourse from DBoS to finance crucial projects such as water supply, power supply, roads and bridges, oil and gas, and agricultural activities, he said.
DBoS, he said, puts in place risk governance and other policies in accordance with Bank Negara Malaysia (BNM) guidelines, regulations, standards and best practices.
Abang Johari also said that DBoS’ strict adherence to its Capital Adequacy Ratio essentially prevents it from taking on excess leverage and becoming insolvent when there is a crisis.
“I would like to emphasise here that it is the policy of the Sarawak government to not issue any guarantee to its fundraising exercise, unlike the federal government.”
He added that alternative funding would only be sought as and when there is a need and capacity for repayment.
“It is totally unwarranted for the Kota Sentosa assemblyman to equate the state’s alternative financing initiative, which has been practised by many countries in the world, including Malaysia, to that of 1MDB,” he said, referring to Chong Chieng Jen.
“The Kota Sentosa assemblyman should be well aware of the simple fact that 1MDB’s businesses and financial structures are clearly operated on a different platform and objective altogether.”
1MDB, Abang Johari said, is a corporation with the business model of buying and investing in strategic assets without having a strong balance sheet and cash flow, and requiring guarantees from the federal government to support its huge borrowings activities.
He said by Chong’s logic, the Pakatan Harapan’s government financing model would be similar to 1MDB as Putrajaya used its special purpose vehicles (SPVs), such as Dana Infra Nasional Berhad, to finance its big and mega infrastructure projects.
Abang Johari also responded to Chong’s claim that discussions on a state sales tax on petroleum products as revenue was “presumptuous” as the tax had yet to be collected from Petronas.
“Let me state categorically in this august house that the Gabungan Parti Sarawak (GPS) government will take all necessary actions to ensure that all persons and entities liable to pay the state sales tax will pay the assessed amount.
“I must firmly reiterate that if Petronas does not pay the state sales tax already assessed on it, legal action will be instituted to recover the unpaid tax,” he said.
He said if Petronas wanted a reduction of the tax rate, the shortfall must be compensated by Putrajaya through an arrangement with Petronas.
“This is to ensure that the revenue from state sales tax on petroleum received for this year and for subsequent years, will never fall below the sum estimated in our annual budget,” he said.