Sabah could shut loss-making GLCs after 5 unprofitable years

 

Sabah government-linked companies (GLCs) that fail to record profits for five consecutive years will be reviewed and could be ordered to shut down, said Chief Minister Hajiji Noor.

He explained that any such GLC, with no credible recovery plan, would be assessed by Sabah’s advisory and monitoring committee overseeing statutory bodies and government-owned companies.

The message, delivered at a dividend presentation ceremony at Menara Kinabalu, reflects growing pressure on state-owned entities to justify continued public support after years of uneven performance.

According to Hajiji, every statutory body and GLC is responsible for paying out a minimum dividend of 10 percent of profit after tax.

“This is a long-established requirement, and I expect all GLCs to demonstrate financial discipline and full commitment in fulfilling this obligation.

“In addition, starting next year, I also want to see an increase in the level of annual contributions from GLCs, ranging from about RM2 million to RM10 million, depending on the company’s capacity and performance,” he said.

The Sabah State Water Department is a state government agency under the Sabah Works Ministry.

More responsible leadership

Hajiji confirmed that the state will reshuffle GLC chairpersons and board members to strengthen governance and enforce responsibility.

He said leadership changes were necessary when companies failed to show progress or discipline.

“The state government appreciates the contributions of the previous leadership (of GLCs), but a reshuffle needs to be carried out to ensure effective and sustainable transformation,” he said.

Hajiji stressed that GLCs must function as effective economic instruments rather than long-term financial liabilities.

As part of tighter oversight, all CEOs, group general managers, and general managers of GLCs and statutory bodies must submit quarterly performance reports to the chief minister from next year.

The Sabah Forestry Department is under the Sabah Agriculture, Fisheries, and Food Industry Ministry.

These reports must detail financial standing, project delivery, key performance indicator outcomes, and operational efficiency.

Failure to meet reporting requirements or performance benchmarks will trigger reviews of senior management, including possible replacement or termination.

Performance could be better

Despite continued dividend payments, Hajiji said overall GLC performance remains only moderate.

This year’s total dividends and contributions to the state stood at RM125.3 million, down from a peak of RM156.31 million in 2022.

“While these figures show that contributions remain positive, I believe the true potential of government-owned agencies is far greater than what has been achieved so far,” he said.

The chief minister said the state expects high standards of financial integrity, transparent execution, and collective accountability from boards and senior management.

He warned that public confidence in state-owned enterprises would erode if they were without disciplined governance and clear directions.

Looking ahead, Hajiji said Sabah must reposition its GLCs to operate in emerging growth areas, including artificial intelligence, renewable energy, aerospace, and data-driven industries.

He also welcomed the MACC’s recommendation that state agencies appoint certified integrity officers or establish internal integrity units.

The ceremony today concluded with Hajiji receiving RM131.6 million in dividends and contribution commitments from GLCs and statutory bodies.

SMJ Energy Sdn Bhd was the largest contributor at RM50 million, alongside a RM1 million contribution to the State Natural Disaster Committee. - Mkini