How does the state government monitor the performance of GLCs receiving these funds?

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State Agencies’ Loan and Investment Committee Oversees GLC Proposals

The Sabah state government monitors the performance of Government-Linked Companies (GLCs) through the State Agencies’ Loan and Investment Committee (SALIC). This committee rigorously evaluates proposals submitted by state agencies and GLCs. The evaluation criteria encompass the specific investment needs, the viability of proposed projects, detailed financial projections, identified risks, thorough due diligence processes, adherence to good governance principles, and the strategic alignment of each proposal with Sabah's broader developmental interests. Following this comprehensive assessment, SALIC forwards its recommendations to the state Cabinet for final decision-making.
SALIC's Evaluation Framework for State Agency Proposals

Proposals seeking state funding or investment are subject to a detailed review by SALIC. This committee's mandate involves scrutinising various facets of a project or investment, including its necessity, the likelihood of success, and its financial sustainability. Aspects such as risk assessment and the robustness of due diligence are critical components of this evaluation. Furthermore, SALIC ensures that all proposed ventures align with the state's overarching strategic objectives before any endorsement is made.
Cabinet Review and Approval Process

The recommendations generated by SALIC are not final decisions but rather are presented to the state Cabinet for consideration. This means that the ultimate approval for any allocation to state agencies or GLCs rests with the Cabinet, following the initial detailed evaluation by SALIC. This layered approach ensures that investments are subject to scrutiny at multiple levels within the state's governance structure.
Dividend Target for State-Linked Companies

Beyond project-specific evaluations, the state government has established a financial performance benchmark for GLCs in which it holds equity. These companies are targeted to pay dividends amounting to at least 10 per cent of their profit after tax. However, the actual disbursement of these dividends is contingent upon the company's financial standing, its immediate operational requirements, and its existing development plans, acknowledging that capital may need to be retained for ongoing operations or future growth.
Strategic Investment Rationale

The allocations provided to state-linked companies, such as the RM200 million for Sabah Development Bank Berhad (SDBank) and RM10 million for POIC Sabah Sdn Bhd, are characterised as strategic investments rather than bailouts. The RM200 million for SDBank, for instance, was an accounting adjustment converting existing fixed deposits into redeemable preference shares, aimed at bolstering the bank's capital position. The RM10 million for POIC Sabah is designated to support operational and management costs for the industrial park developer in Lahad Datu.

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How does the state government monitor the performance of GLCs receiving these funds?

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