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Aug 8, 2017

1/8/17 WITH DBOS, SARAWAK CAN NOW REVISIT OUR DEVELOPMENT FUNDING MODEL .... an early salute to Abang Jo (Draft)

During Taib's era, the State had been embarking on numerous Projects based on Return In Kind payment. While such model was necessary at such period, it shouldn't be prolong. Indeed I was happy when Adenan, upon taking over the State leadership and surely due to political support deficit he inherited, he made a smart move by removing the few toll bridges in the State. With such he, then demand the construction of a a toll-free Pan Borneo Highway. He then stopped the illegal logging and new plantation land giving out.

(2) While Taib's made return in kind as his preferred choice, and definitely, as far as human being is concern, nothing come perfect from them, despite such, I would say and based on my observation, our practiced funding development by meant of return in kind indeed had hampered our healthier economic growth despite we believe otherwise. What had for instance the great economic growth effected by say the toll bridge of Salahuddin, Igan and Baram? Did Petra Jaya and Pending really experiencing high growth impact due to Salahuddin toll bridge? I don't quiet see much. Even the land used to pay in kind to the developer, to this day had not been fully developed. Similarly, did the Igan toll bridge gave great impact over both banks of the Rajang river serves by this bridge? Again I don't quiet see much. The plantation land given to the developer, I believe had not been fully developed despite since the last five years the price of palm oil was way above RM2,500.00 per tan, which is quiet feasible. The Baram toll bridge is just similar. Nothing much is progressing in Kuala Baram area. I don't deny there was growth, but more of temporal, not healthy indeed. The biggest mistake of Taib, I would say was, when he spent the State funds more to finance some strategic investments which were not even proven successful worldwide in trade off to the much needed strategic basic development funding. Say, to quote, the multi-billion (?) funding of the 1Silicon, indeed had deprived the State to say building may be 10-15 bridges and thousands kilometers of road that would help to open up our country side to a wider and much sustainable growth. Any way, missed calculation had been done either by design or ignorance, Sarawak indeed had experienced slow growth for the last 10-15 years. We should be able to learn from our past and never repeat as such any longer.

(3) In Malaya, the return in kind modus operandi had been replaced by Private Funding Initiative, PFI due to land shortage. Returns to developers are not in term of immediate cash, but deferred payment based on various models. One of the model was payment through concession holding. Such strategy was indeed what in the accounting terms as spreading the public (stretching) cash flow. Instead of funding a big sum onto just a few projects, the same fund can be stretched to finance more projects with a view of high confident on the future healthy cash in flow. The toll highways, bridges, airports, ports and certain public transport are applying such model. To me such application sound feasible due to potentially high cash inflow. Unfortunately the PFI had gone viral to fund public development that have high proensity of not even self financing. Worst the political greed and patronism had come to play.  Today, if one really analyze our Ringgit Health, our fund shrinking is due to all these types of funding.  Thus, PFI is only great if the Project is having the elements of self financing mechanism, failing which, the Malays saying ukur kain ke badan sendiri must apply and definitely prudential fund management must be in place.

(4) Though PFI is mostly practiced in Malaya, nonetheless as a Nation, Malaya debt is also Sarawak responsibility. The viral application of PFI indeed had made this Nation to shoulder high operating cost. Payment of debts, I would believe is now being treated as operating cost. PFI transferred public funding to private borrowing with the public as guarantor.  In return, indirectly, the public is now have to pay for all the high cost due to private commercial funding mechanism. Thus, the shrinking of today public funds is mostly due to the viral application of PFI. Definitely poor governance especially corruption added more salt to the wound.

(5) As per return in kind, I would say is worst then PFI. In this model, the developer is suffering from  multiple financial blow. First he need to raise fund to finance the Project given to him. Such warrant a commercial funding arrangement, mostly between 5-7 per cent financial cost. So with the completion of the Project, he landed with a Huge Project Debt. He then suppose to handle his debt through the return in kind. But such return in kind was not an instance cash out, so much so, then, he has to embark onto commercialization of his return in kind. To make his return in kind profitable, say if the return in kind is a piece of forest land, which was normally the case in Taib's time, he will make a total harvesting, but still due to all sort of reasons, the return will never be enough. He may ended with greater debt if his operation is not profit making. He then need to do the Plantation, and that would drag him to say 13 years of Second Huge Debt. Thus, historically, we can see, at Taib's time, he need to continue to support all these people so much so, he then being seen to have huge cronies, which not necessarily so. Taib indeed all along his tenure as the CM particularly 10-15 years toward the end, had to make lots of bail out. As people could judge, based on potentially wrong perception on Taib's approach, we then experiencing the politic of politicking. People were not seriously putting their heads together to do the best. The incumbents stay on as hard headed while the opponents enjoying doing the attack. No body indeed doing the required works, and thus people becoming inert. Sarawak had experienced this, and now on a wider scale the Nation is moving down the drain accordingly.

(6) Nonetheless, thanks to the opposition, be they right or wrong, Allah had then made Adenan to surface, and dare to be different and smart. Allah interest in Adenanself to me is and was simple. He is just interested to save His people doesn't matter who they are from all the potential miseries due to reason(s) not quite known to them. I remembered hearing Adenan saying Nok udah dapat, udahlah. Berik agik dengan urang lain which basically he meant enough is enough. Adenan mooted the concept of distribution which jived well into Allah's prerequisite of justice. In Allah's natural law, everything is in balanced and harmony once the element of distribution is well practiced. That is smart of Adenan, here on earth and In Shaa Allah hereafter as well.

(7) Today, Abang Johari, he said he will carry on with Adenan legacy. But I believe, he will do much more than Adenan. The most appealing to me is the idea of establishing the Development Bank of Sarawak, DBOS. In today world, World Bank (WB) is a brilliant idea of the Jews whom assembled all the rich and powerful Jewish banking resources to form the Reconstruction Bank (later as IMF) after the WWII to rebuild Europe. IMF then evolved to be the World Bank. The Jews, whom love to see their wealth to grow to no end, under the pretext to rebuild Europe and even the rest of the world, do benefit to the optimal to this day on the establishment of IMF and WB. The WB then had spurred the idea for the establishment of Asian Development Bank (ADB) and thus the Islamic Development Bank (IDB). Even China is now has established a special Development Bank to finance their interests in Africa, Asia and South America.

(8) In Malaysia, under Mahathir, the idea of Development Bank is nothing new. Exim Bank and even the Malaysian Development Bank were all meant to take Malaysia to the industrialization process even faster. Mahathir had instrumented the Banks to assist those capable and talented to grow to take Malaysia to the economic level we are now enjoying. Thus, accordingly, to Abang Johari's idea, I would love to give him a first salute. To make the Bank to work the best, it is now our duty to work on it. Abang Johari can't do much on lone ranger basis. Nothing is perfect, but there is nothing to stop us to work to be perfect. Indeed I can visualize, DBOS In Shaa Allah with clear determination and good governance, DBOS could be made into Borneo Development Bank (BDB).

(9) For Sarawak, we need to depart from both PFI and Return in Kind of development funding modus operandi. PFI should be limited to projects that has high potential for self financing. We should stop Return in Kind, RiK arrangement. RiK is not only high cost, it also imparts a non efficient resources management. RiK landed our resources in the hands of few whom now turned incapable. Despite their inability to unlock their assets, due to high cost of acquisition, they love to hold on it at all cost, which are counter productive. RiK is not an answer to promote sustainable healthy economic growth. Indeed it is a factor that impede long term growth. I dare to say, Sibu is now experiencing the impeding of RiK. Kuchig should be growing better if RiK was not practice here.

(10) DBOS can be a good source of funding for projects that would improve the people income level and thus as meant for the State to earn a long term income return as well. The people, the investor and the State must all benefit equitably from the presence of DBOS. JV between the people, the State and the investors capitalizing on the DBOS, should be an area that the State must look on for DBOS. Cheap and prudential financial cost, I would say is a move toward ribaless enterprises. If we work smart and determine enough, DBOS can evolve into the real Islamic Banking that we are really desperate of.  Islamic banking is about stability. Today financial world had been sucked up by speculative trading which incurred high riba. Allah hate riba. Riba curtail our healthy growth. DBOS can take on as a factor to pressure our present financial system to take nation building as their key business strategy. They can't just suck up, without mercy over the fate of the Nation. To me, in a way DBOS should be seen as the IMF the way the Jews are managing it, but minus the riba. IMF imposed high riba due to the fact that the world is indeed their healty cows. DBOS  operational model should be simple; let GOS becoming the Jews, the people are the World, DBOS is the IMF or WB. While the people (World) are being developed through careful funding of DBOS (IMF), the GOS (Jews) definitely will harvest laughing to the end. SubhanaAllah. As Allah said, nothing that He created or sustained that give no benefit to everybody if one dare to think and insaf. The Jews, despite Allah disliking of them, their presence is nothing but to impart good benefit to those really have the piety Iman on His Allahuakhbar. In business, the Jews are very prudential except, their riba is the thing that Islam forbids. With DBOS, plus prudential governance, Sarawak can comfortably moving forward in more stylist and independent manner. In Shaa Allah.

Kuching, Sarawak
8 August, 2017

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