Uggah quashes Pakatan claim that alternative financing model will bankrupt state in 3 years
Datuk Amar Douglas Uggah
KUCHING: Deputy Chief Minister Datuk Amar Douglas Uggah has given his assurance that Sarawak will not go bankrupt within three years as alleged by Pakatan Harapan (PH) Sarawak chairman Chong Chieng Jen.
Uggah, who is also Second Finance Minister, said the Sarawak government will only resort to alternative funding when in need and when there is a capacity to repay.
“The unscrupulous allegation that the borrowing is beyond the state government’s ability to repay which could lead to bankruptcy within three years is baseless and irresponsible.
“This is a blatant attempt by the said Opposition Member for Kota Sentosa (Chong) to continue on harping on the issue by discrediting the state government’s budgetary system, fiscal and financial management to gain political mileage and cheap publicity,” he said in a statement yesterday.
Uggah pointed out that what was most important was that borrowing would only be for strategic and productive purposes and not for financing of operating expenditure.
He also said repayment of the financing will be made on staggered basis and spread over a periodic number of years, and provided in the state annual budget.
Besides that, with the Sarawak government’s initiative to broaden its revenue stream via revenue re-engineering, he assured that Sarawak’s financial capacity would be further strengthened to ensure its financial sustainability and ultimately, financial autonomy.
Chong had told a press conference at the State Legislative Assembly building on Wednesday that the Gabungan Parti Sarawak (GPS) government would bring the state towards the path of bankruptcy within three years if it persisted with indiscreet and reckless spending.
Chong had cited Chief Minister Datuk Patinggi Abang Johari Tun Openg’s 2020 State Budget, which has a total expenditure of over RM22 billion but the amount tabled was a sum of RM9.694 billion.
Chong had also alleged the Sarawak government’s Alternating Financing Model was nothing else but borrowing through raising bonds and borrowing from the capital market through Development Bank of Sarawak (DBoS).
On DBoS, Uggah explained the Sarawak government is primarily sourcing funding for development purposes from DBoS, which is a state-owned bank that provides competitive long-dated financing to meet the state’s financing needs at the minimum cost over the long run.
He also reiterated that sourcing of funding through alternative financing initiative would not be necessary if the PH federal government had fulfilled promises to allocate 30 per cent of the total annual Federal Development Expenditure to Sarawak and remit 50 per cent of the revenue collected back to Sarawak.
“Nobody can deny the fact that Sarawak has contributed tremendously to the national economy and federal coffers.
“We tap funding domestically because we have the capacity to do so and this is recognised by the financial industry players. The state’s healthy financial standing and our stable socio-political environment have earned us, our commendable investment grade credit ratings of A-, A3 and AAA by reputable international and domestic rating houses.
“This is a clear testimony to the state’s continuous sound financial management in exercising financial prudence and discipline at all levels, at all times,” he said.
Uggah also said all Sarawakians want their state to be better or on par with other states in Malaysia and would want to see Sarawak to be a developed state by year 2030.
To achieve this economic objective and accelerate the state’s economic growth, he said the government would have to initially build the long-awaited and much-needed physical infrastructures and amenities throughout Sarawak.
He pointed out this is critical to lay out the foundation and open up areas for more productive economic activities that will provide greater business and jobs opportunities.
“In taking up this state development agenda, the state government is formulating a strategic and prudent financial management of its fiscal resources to ensure its financial sustainability moving forward.
“In meeting the financing requirement of this development, the state will allocate annual provision in the state budget as well as receiving allocation from the federal budget. However, in the Federal Budget 2020, the state will only be getting 7.8 per cent of the total Federal Development Budget which is far from enough to cover the state’s capital programs and projects.
“At the same time, the annual state budget is also subject to the five-year Malaysia development plan ceiling. Thus, to leapfrog the state’s strategic infrastructure development, the state would need to resort for a more robust effort in financing its development agenda via alternative financing initiatives to complement the state budget,” he said.