KUCHING: The Sarawak government wants profitable government-linked companies (GLCs) to increase their cash dividend contributions to the state.
Sarawak Premier Tan Sri Abang Johari Tun Openg said GLCs should not limit themselves to minimum dividend payments when they are in a position to contribute more.
“For profitable GLCs, dividend contributions should not be viewed merely as a compliance requirement. They are a return to the people of Sarawak, and a contribution towards funding roads, schools, welfare assistance, rural development and future investments.
“Stronger performance should translate into stronger returns to the state,” he added at the Sarawak State-Owned Enterprises (SOEs) Transformation Programme here recently.
Abang Johari noted that overall profitability across many of Sarawak’s SOEs improved between 2023 and 2024.
Companies under the state financial secretary recorded an increase of almost 58% in dividend declarations, while the number of statutory body-linked companies declaring dividends rose by 44%.
He added that 18 profitable GLCs have yet to declare dividends to the state.
“The state government will introduce a clearer framework to enable profitable statutory bodies with healthy financial surpluses to contribute cash returns to the state.
“This initiative will help broaden the state’s revenue base, strengthen financial discipline and ensure that public resources are utilised more effectively to support Sarawak’s development agenda,” he said.
The premier pointed out that 30 SOEs have been identified as dormant, with some remaining inactive for many years and others lacking clear justifications for their continued existence.
“These are issues that cannot be ignored. Public resources are limited and must be utilised responsibly. Every entity must have a clear purpose and a clear mandate.
“Where SOEs are no longer delivering value, we must have the courage to make difficult decisions whether through restructuring, consolidation, divestment or, where necessary, closure.”
Under the first phase of the Sarawak SOEs Transformation Programme, Abang Johari said the state financial secretary’s office undertook a comprehensive assessment of 36 entities, comprising 19 GLCs and 17 statutory bodies.
“The findings provide us with comprehensive assessment of where we stand today and, more importantly, what must be done moving forward.
“The study found that many of our statutory bodies remain significantly dependent on government support.
“Government grants currently account for approximately one-third of their total income, while about 44% of operating expenditure is funded through operating grants. Nearly half of the cost of operating of some of these entities continue to be funded by public resources.
“This is not merely a financial issue. It is a question of stewardship and accountability. The resources entrusted to these entities come from the hard work of taxpayers, businesses and ordinary Sarawakians, who expect us to manage public funds responsibly and deliver meaningful outcomes,” he added.
By 2030, Abang Johari said the implementation of the Sarawak SOEs Transformation Programme is projected to reduce operating grant requirements by approximately RM403mil – funds that can instead be redirected towards development projects, including infrastructure, to create more economic opportunities in every corner of Sarawak.
“The benefits extend beyond grant savings. Existing government loan balances are projected to decline significantly to approximately RM1.7bil by 2030 through stronger financial performance and loan restructuring initiatives.
“At the same time, dividend contributions from our commercial GLCs are expected to more than doubled as profitability improves.
“Based on the targets established under the SOE Blueprint Study, 21 of the 36 entities assessed are expected to achieve financial self-reliance by 2030 and beyond, while another 10 are expected to significantly reduce their dependence on operating grants and become only partially reliant on government support,” he added.
The premier said that as Sarawak moves towards becoming a developed region by 2030, it must also ensure that its economic model supports the growth of both the public and private sectors.
“This brings me to an important principle that will become increasingly relevant in the next phase of Sarawak’s development – competitive neutrality.
“As we invite greater private investment into Sarawak and position ourselves as a competitive investment destination, we must ask ourselves an important question: Are we creating a level playing field where businesses succeed based on capability, innovation and performance?
“The reason is simple. If SOEs benefit from advantages that are not available to private sector players – whether through financing arrangements, regulatory exemptions, or other forms of implicit support – we risk discouraging private investment and weaken market competitiveness.
“Without neutrality, we risk inefficiency. With neutrality, we encourage innovation, productivity and healthy competition,” said Abang Johari.
Where SOEs operate in commercial markets, he said there must be greater transparency, proper ring-fencing between public and commercial activities, and pricing that reflect commercial realities.
This is important not only to ensure fair competition but encourage SOEs to remain efficient, innovative and competitive in their own right.
Ultimately, Sarawak needs strong SOEs as well as strong private-sector champions, he said.
“One should not come at the expense of the other. Both must grow together, complement one another and contribute towards building a more resilient, dynamic and prosperous economy.”
Abang Johari said the state government had approved the Sarawak State Ownership policy (Sarawak SOP), which he described as a significant milestone in Sarawak’s reform journey.
Complementing the Sarawak SOP is the Sarawak Code of Corporate Governance for SOEs. At the event, all the chief executive officers and general managers signed a pledge of commitment to the Sarawak SOEs Transformation Programme.
They were also presented with The Roadmap Towards Financial Self-Reliance and High Performance playbook.
