The Sarawak government is likely to inject about RM3 billion from its reserves to kick-start its operations, according to a report in The Edge. Approval for the money injection is expected to come at the next state assembly sitting, probably in October or November.
The Edge reported that of the RM3 billion, RM1 billion would be used as paid-up capital and the balance as a deposit by the state government.
“This means the state government will earn interest income, most likely 4% to 5% per year (from its deposit in the bank),” one source told The Edge.
The plan to set up the DBOS was announced in April, three months after Abang Johari Openg was sworn in as chief minister.
He had earlier been reported to have said: “The four strategic projects that the bank will finance are ICT infrastructure (digital economy), the energy sector (power generation and oil and gas), urban public transport and services such as healthcare.”
The Edge said the bank’s board of governors had been established, chaired by State Secretary Mohamad Morshidi Abdul Ghani.
According to the report, some people have raised concerns about using state reserves to start the bank. They point to the potential depletion of the reserves, given a number of mega projects that have been announced in addition to DBOS.
If the projects are funded by state reserves, they argue, it could reduce the interest income, which has thus far helped shore up the state’s revenue and underpinned a 14-year streak of budget surpluses, given that a deficit budget for 2017 was tabled for the first time, according to the report.
A local daily reported in April that the state’s reserves stood at roughly RM29 billion then.
When contacted by The Edge, Abang Johari declined to comment on the state’s latest reserves.
The report said, in a brief reply via his office, Abang Johari also said the planned LRT and ICT projects would tap private funding instead of state reserves and that more information would be disclosed at the next state assembly meeting.
This year, the state is expecting total ordinary expenditure of RM5.7 billion against total revenue of RM5.3 billion, with a RM385 million deficit.
However, The Edge quoted “an observer” as saying that the planned allocation for DBOS would not deplete the state’s reserves and that the state would actually, “earn higher interest than, say, putting the money in fixed deposit”.