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Yong: Save Sabah from bankruptcy

Kota Kinabalu, Saturday, 27 June 2020

The plight being faced by University College Sabah Foundation (UCSF) is a foretaste of what is to happen to the rest of the Sabah government if the current Warisan-led Sabah administration is allowed to continue with its incompetence and political foolishness. UCSF has just announced pay cuts and work hours due to financial difficulties.

The Sabah government is headed for financial bankruptcy if nothing is done to save Sabah. The incompetence of the Sabah administration and the glaring failure to tackle the economic fallout of Covid-19 amid the reckless plot of Sabah government leaders to try to topple the Prime Minister have created a perfect storm of economic crisis in Sabah.

Anwar-Mahathir feud and Warisan-led alliance breaking up

Compounding the economic mismanagement, the Warisan-led Sabah government is paralysed by the implosion of Party Warisan which is riddled with internal conflicts. The Warisan-led political alliance is fundamentally flawed because Parti Warisan wants Tun Dr. Mahathir Mohamed to be the 9th Prime Minister where the PKR wants its own President, Datuk Seri Anwar Ibrahim as Prime Minister. Such intense conflict at the highest level between PKR and Warisan is breaking up the Warisan-PKR alliance in Sabah.

Sabah revenues fall short of commitments

On the financial front, it is expected that Sabah’s revenues this year will fall short of its financial commitments. Based on the budget of 2020 approved by the Legislative Assembly last November, the revenues for this year was projected to be RM4,192 million against expenditures of RM4,143 million, leaving a surplus of only RM49 million.

The two Covid-19 aid packages announced on March 25 and June 18, amounted to RM910 million. This has wiped out the little surplus, leaving a deficit of RM806 million.

All of Sabah’s main revenue sources are expected to fall. For instance, due to the double blow of lower production and lower prices, petroleum royalties are expected to fall from the budgeted sum of RM1,700 million to only RM1,100 million. Similarly, Crude Palm Oil sales taxes are projected to fall from RM852 million to RM600 million. Due to stagnation in development, land revenues (budget RM300 million) will fall to around RM200 million. Big items affected are water revenues (down from RM305m to RM250m), Gaming sales taxes (down from RM60 million to RM30 million) and seafood export taxes (from RM10 million to zero). The 50% share of the federal tourism tax will be negligible.

This revenue drop adds up to RM1,047 million. Add this revenue drop to the deficit of RM806 million, it means that the Sabah Treasury will face a deficit of RM1,853 million.  And this is assuming that the entire budgeted federal contribution of RM463.00 million will be disbursed to Sabah. Remember, Sabah is no longer simply an “opposition state”. Instead, our Sabah government has turned Sabah into an “enemy state” that is aggressively trying to topple the PN Federal Government. How is Sabah going to pursue from the Federal Government the incentives and benefits of the National Economic Recovery Plan (Penjana) that are being implemented now?

On the expenditure side, Sabah’s emoluments (civil servant salaries etc.) add up to RM739 million. Recurrent expenditures are RM1,495 million. These two items alone take up 70% of the post-Covid-19 reduced budget which is a very worrying situation.

Sabah bust if not for 2017 RM4 billion reserves

Like an ostrich burying its head under the sand, Warisan ministers are in self-denial about the stark financial reality and the consequences of their failures and political foolishness.

In fact, if not because of the RM4 billion reserves carried forward from year 2017, the Sabah government would have gone bust by now. According to the State Treasurer in January last year (2019), the Sabah government had financial reserves of RM4 billion in 2017. How much of that is left now?

Datuk Yong Teck Lee
Ex-Chief Minister, Ex-Finance Minister, SAPP President

(Reference attached: The 2020 Budget Speech, 15 November 2020)
(Reference: State’s reserves at healthy RM4 billion, Daily Express, January 29, 2019)