SABAH opposition leader Datuk Seri Mohd Shafie Apdal said Sabah Forest Industries (SFI) was already in deep financial trouble when his administration took over in 2018.
“When it was transferred to Lion Group, it was already owned by the bank,” he said.
He was responding to allegations that it was during his time as chief minister that the trouble with SFI begin to take shape.
Shafie noted that while the state had no stake in the pulp and paper company, it still had authority over timber extraction permits – its only leverage to prevent logging at the 700,000-acre estate.
He said he refused to approve timber extraction from SFI during his tenure as Chief Minister, fearing the company would be reduced to a logging operation.
“(We) Only had the right to sign to extract timber. That’s it. But no ownership of the company,” he said after a breaking of fast event in Sandakan.
He said he believed there were efforts to take over SFI purely for its timber assets, which he sought to prevent.
As part of efforts to revive the company’s industrial operations, he travelled to Shenzhen in China, to engage a serious investor capable of continuing the pulp and paper business.
“And I wanted to find real people who can do the job. Because it is not about timber alone .. they just want to sell the timber. They don’t want to process the paper,” he said.
Shafie did not name the parties involved in the proposed timber-centric takeover.
However, SFI was in the process of being acquired at the time by Pelangi Prestasi Sdn Bhd, a company reportedly controlled by tycoon Tan Sri Syed Mokhtar AlBukhary.
Pelangi Prestasi had initially signed an agreement to acquire a 98% stake in SFI from India-based pulp and paper manufacturer Ballapur Industries Ltd for about RM1.2 billion in April 2018.
Under the deal, Pelangi Prestasi would assume control of SFI, including its assets, land titles, and timber licences.
The company later took the Warisan-led state government to court after its decision not to issue new timber licences to SFI.
The state government instead imposed a new set of preconditions for granting licences.
The previous Barisan Nasional government had agreed to approve new timber licences for Pelangi Prestasi, provided it fulfilled the prerequisites before it was ousted in the 2018 General Election in Sabah.
Pelangi Prestasi pursued the matter in court and this resulted in a prolonged legal uncertainty till this point.
Shafie said his proposal in Shenzhen at the time involved the investor taking a 70% stake and returning 30% to the state government, with no financial outlay from the state.
“I said okay … fair enough. You take 70% and give back 30% to the state government. We don’t have ownership anymore.
“The state government doesn’t have to pay a single cent,” he said.
Despite discussions, the deal did not materialise.
“It is already with the bank. It is under receivership. How can I say that it was my doing? It is not because of us,” he said.
“We wanted to salvage it. That is why we were looking for investors.”
Shafie said his administration’s objective was to preserve industrial activity in Sipitang and protect the livelihoods of local workers.
“We salvage. That’s our goal. To help 2,000, more than 3,000 Sabah people who work in the farm,” he said. - March 24, 2025
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