Stop RM300 million Sabah loan to AirAsia, says SAPP chief

 

SAPP president Yong Teck Lee says the Sabah Development Bank should not be taking risks on investing in the airline during the pandemic.

KOTA KINABALU: The Sabah state government has been urged to stop a RM300 million loan approved by the Sabah Development Bank to AirAsia.

SAPP president Yong Teck Lee said the state-owned bank is mandated to provide development financing to projects in Sabah and not on risky ventures.

He said it is not in the best interest of the Sabah government and SDB to risk its limited funds to keep AirAsia afloat.

“If any help is needed to keep both AirAsia and Malaysia Airlines afloat, then it is for the federal government to take up the tasks,” he said.

“What is RM300 million compared to the RM66 billion debt that AirAsia is exposed to? How can RM300 million of SDB’s meagre funds help to keep AirAsia afloat?

“RM300 million is only 4.5% of the debt exposure of AirAsia. Instead, the RM300 million can do a lot to help revive the Sabah economy by lending to the housing, agricultural or construction sector in Sabah,” Yong said.

“The airline industry is hardly something that SDB should be taking risks with during the Covid-19 pandemic. Any banker and businessman knows what crisis the airline industry is facing. As reported, AirAsia is already being sued by Malaysia Airports Holdings for RM78.16 million,” he said.

Yong also asked if the RM300 million loan exceed the Single Borrower’s Limit according to banking standards.

“As the new government has just taken office three weeks ago, it is safe to say that the loan was approved during the era of the last government. SDB should be made answerable for the loan approval,” he said in a statement here today.

According to news reports by local and international media, SDB has approved a RM300 million loan to AirAsia “to keep the airline afloat amid the coronavirus pandemic”.

Yong questioned what repercussions on the loan there would be the airline had not recovered after two months. “What if AirAsia ends up like Dragon Air (which was shut down), a subsidiary of the mighty Cathay Pacific, Hong Kong’s flag carrier?” - FMT