Funding issues for Pan Borneo Highway

THERE appears to be some misunderstanding between the Sarawak government and Putrajaya over the funding for the 1,089km Sarawak portion of the Pan Borneo Highway project. While Sarawak expects the RM16 billion to build the highway to come from an allocation over and above the normal infrastructure expenditure, Putrajaya, it seems, has been under the impression that the cost of building the highway would come from the regular allocation.

Sarawak Chief Minister Tan Sri Adenan Satem, in his winding-up speech at the state legislative assembly in the middle of last month, said, “I had expected the budget for the Pan Borneo Highway to be above and beyond the usual development effort. Now, they [Putrajaya] seem to have included the budget for the Pan Borneo Highway at the expense of our obligation to develop infrastructure. I am pursuing this point; I want it [the budget] to be above what they usually provide for us.”

Local newspapers in Sarawak have reported on the subject but there has been little impact, other than the state government saying it will talk to Putrajaya.

In a brief conversation with The Edge, Chong Chieng Jen, the opposition Democratic Action Party’s Sarawak chairman and Bandar Kuching Member of Parliament, says that “Sarawak has been taken for a ride. There are insufficient funds in the coffers for the Pan Borneo Highway as what was initially planned by Adenan.

“[The plan] initially was that the allocation [for the highway] would be over and above that for development every year. Some funds for other projects were channelled to the Pan Borneo Highway … it has been profiled as something extra for Sarawak.

“It [the highway] was projected to bring Sarawak up to par with the Semenanjung [Peninsular Malaysian] states [in terms of development]. This was [said] before the election … this is not the case now.”

State officials declined to reply to questions by The Edge sent via email. “I regret the chief minister is not able to answer your questions for now,” an aide replied.

Nevertheless, some executives in the know brushed aside the concerns and suggested that the Pan Borneo Highway will certainly go on as scheduled.

“It is about transferring allocations. It is more for the Ministry of Finance to answer than us,” one executive explains, while another says the issue is merely an accounting one.

To recap, Prime Minister Datuk Seri Najib Razak had announced the construction of the Pan Borneo Highway back in April 2013, when he unveiled Barisan Nasional’s manifesto. Najib, who is also the finance minister, included the construction of the Pan Borneo Highway in Budget 2015 as well.

The 1,089km highway is scheduled for completion in 2023. It is slated to link Telok Melano at the southernmost tip of Sarawak and Merapok, the northernmost town in the state, bordering Sabah.

In the middle of last year, Lebuhraya Borneo Utara Sdn Bhd was given the mandate to build the Sarawak portion of the highway and was appointed the project delivery partner (PDP) for its construction.

Privately held Maltimur Resources Sdn Bhd owns 55% equity interest in Lebuhraya Borneo Utara while Jalinan Rejang Sdn Bhd owns the remainder.

Jalininan Rejang is 40% controlled by Sharifah Noor Ashikin Sy Aznal and 30% each by Mohd Khalil Dan and Muliana Munir, while Abang Abdul Rahim Abang Ali has less than 1% in the company.

Jalinan Rejang was set up in early July 2012 and is largely a dormant company. It has not filed any financial results.

Maltimur is an investment holding company incorporated on June 5, 2012. It has a paid-up capital of RM1 million and little in terms of assets. Its financials indicate an
after-tax loss of RM285,677 without any revenue for its financial year ended December 2014.

The company’s shareholders are Mohamad Zaidee Abang Hipni, who has 40% equity interest with 30% held by Safuani Abdul Hamid and 30% by Tan Sri Abang Ahmad Urai Datuk Abang Mohideen.

Ahmad Urai is a Sarawak politician who was president of the Senate from 1988 to 1990.

While issues have sprung up in the Sarawak portion, in April this year Warisan Tarang Construction Sdn Bhd, partnering UEM Group Bhd and MMC Corp Bhd, was awarded the multibillion-ringgit Sabah portion of the Pan Borneo Highway. The three companies are set to be the PDP for the 700-odd kilometre Sabah portion of the highway, costing some RM13 billion.

UEM and MMC equally control 40% of the joint venture PDP while Warisan Tarang controls the remainder 60%.

There is as yet no indication of funding issues for the Sabah portion of the highway.

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This article first appeared in The Edge Malaysia on July 4, 2016. Subscribe here for your personal copy.