Kota Kinabalu: Sabah’s government-linked company (GLC) sector has struggled with political interference, governance failures and poor financial management for decades, said retired banker and advisor to the State Government in his role in the Sabah Economic Advisory Council (SEAC) as well as the Institute for Development Studies (IDS), Datuk John Lo.
Speaking on the “Sabah Matters” podcast of Daily Express, Lo said many of Sabah’s GLC problems can be traced back to the period after former Chief Minister Tan Sri Harris Salleh stepped down, when politics became increasingly intertwined with the management of state-owned companies.
“When you have GLCs mixed with politics, then that is the beginning of the problem.
“And we could never get out of that cycle until recently. And we still have some problems,” he said.
Lo described Sabah’s GLC challenges as a “huge” and historical issue dating back to the 1980s, involving more than 260 state-linked companies operating across key sectors of the economy.
He said the problem extends beyond political influence and includes weaknesses in governance, management and financial administration.
“All these things have come together, and the problem is massive,” he said.
According to Lo, most of Sabah’s GLCs control strategic assets and monopolies in sectors such as tourism, ports, infrastructure, mining and other industries, making their performance crucial to the state’s economic development.
“Number one, 260-plus GLCs. Number two, the majority of them are not well managed. Number three, they have control of monopolies in almost every sector of the economy.
“If these things, we cannot get our act together, then the Sabah economy cannot move,” he said.
Lo said decades of poor decisions also resulted in the loss of valuable state assets, including prime land transferred to GLCs before being developed through joint ventures with private firms.
He claimed many of these ventures involved companies from Peninsular Malaysia and ultimately led to Sabah losing control over strategic assets while accumulating debt.
“A lot of premier or high-value land that the state government has given to GLCs for a mere sum of RM1, 000. Most of them are non-Sabahan companies, and then we lost control,” he said.
Lo pointed to several abandoned developments in Kota Kinabalu, claiming many were linked to joint ventures involving GLCs and external companies.
“If you look at Kota Kinabalu, for example, all the failed projects here, the majority of them are GLC joint ventures with companies from West Malaysia,” he said.
Lo, however, said efforts by the current State Government to reform the sector were beginning to show results.
He cited the Sabah Economic Development Corporation (SEDCO) as an example, saying the agency had started to improve after undergoing management changes.
“SEDCO is on the right path now. The future of SEDCO will be bright if we can continue what Datuk James Wong has started,” Lo said.
While acknowledging that some GLCs are now showing signs of recovery, Lo stressed that resolving problems built up over four decades would take time.
“A legacy problem of 40 to 50 years cannot be resolved within two years, so it’s going to take a while,” he said.
