KOTA KINABALU: Parti Solidariti Tanah Airku (STAR) President Datuk Seri Panglima Dr Jeffrey Kitingan (pix) believed the state government should heed the warning by former chief minister Datuk Seri Panglima Yong Teck Lee to review the RM300 million Sabah Development Bank (SDB) loan to Malaysian low-cost airline AirAsia.
In a statement today, the deputy chief minister said judging by the current economic condition, the loan which was approved by the previous State government could jeopardise the financial position of SDB.
“Since the bank’s main objective is to finance development projects in Sabah, it is a wonder why the little money it has should go to an ailing aviation company that is bogged down with a RM66 billion debt.
“If the company failed to make good on the loan repayment to SDB, it would have a negative impact on the bank and the health of the State’s economy,” he said.
The RM300 million loan, which is approximately 4.5% of the company’s total debt, allegedly would help finance the company’s local operations for the next two months.
Several media sources reported the loan was approved in July this year, at the height of the Coronavirus pandemic in Sabah.
Commenting on the suggestion by Parti Bersatu Sabah (PBS) Vice President Datuk Johnny Mositun that the loan can be converted to equity, Jeffrey disagreed as doing so would not mean much compared to the urgent needs of the people.
“It would probably not amount to much compared to the huge stake potentially demanded by other AirAsia’s creditors,” he said.
Jeffrey said it would be more beneficial to invest the money on a separate Special Purpose Vehicle (SPV) company to carry out Sabah projects and avoid potential but expected problems arising from AirAsia’s debts.
He said development projects in Sabah are more necessary now as they could have a bigger impact in helping Sabah’s businesses and boosting the local economy.
“The state government must ensure the money is utilised for the Sabah projects and not rescue AirAsia.
“We have to remember that AirAsia Japan has already closed down operation and other AirAsia units are currently facing financial difficulties,” he said.-HS