Underperforming State GLCs Face Closure After Five Years of Losses

18 December 2025

KOTA KINABALU: Government-linked companies (GLCs) that fail to perform for five consecutive years will be placed under strict review and may be ordered to shut down, Chief Minister Datuk Seri Panglima Hajiji Noor warned today.

He said any GLC that records no profit for five straight years will be scrutinised by the State Government Companies and Statutory Bodies Monitoring and Consultant Committee (JPP-KKNS).

“The State Government will not hesitate to issue a shutdown order if the GLC concerned shows no prospect of recovery,” he said when speaking at the presentation of dividends and contributions by GLCs and statutory bodies at Menara Kinabalu here.

Hajiji reiterated that all statutory bodies and GLCs are required to comply with the minimum dividend payout rate of 10 per cent of profit after tax.

“This is a long-established requirement, and I expect all GLCs to demonstrate financial discipline and full commitment in meeting this obligation.

“Beginning next year, I also expect an increase in annual contributions from GLCs, ranging from about RM2 million to RM10 million, depending on their capacity and performance,” he said.

The Chief Minister also confirmed that the State Government will undertake a revamp of GLC chairmen and board members to strengthen corporate governance, enhance accountability and inject fresh leadership.

“While we appreciate the contributions of previous leadership, this restructuring is necessary to ensure effective and sustainable transformation,” he said.

He stressed that the move aligns with the Sabah Maju Jaya 2.0 agenda, which aims to position GLCs as efficient, credible and trusted economic catalysts capable of generating higher income and value for both the state and its people.

Hajiji further announced that, starting next year, all chief executive officers, group general managers and general managers of GLCs and statutory bodies will be required to submit quarterly written performance reports directly to him.

“These reports must cover project progress, financial standing, Key Performance Indicator (KPI) achievements and overall operational efficiency.

“Any party that fails to submit the report, does not meet KPIs or demonstrates unsatisfactory performance will have their position reviewed, including the possibility of replacement or termination,” he said.

Based on current assessments, Hajiji noted that overall GLC performance remains at a moderate level. Total dividends and contributions to the State Government currently stand at RM131.6 million, compared with the peak of RM156.31 million recorded in 2022.

“While these contributions remain positive, the true potential of state-owned agencies is far greater than what has been achieved so far,” he said.

He emphasised that the State Government demands high standards of financial integrity, transparent implementation and accountability.

“To achieve this, board members and top management must work as a cohesive team in decision-making and strategic planning."

“With a renewed business direction, disciplined corporate governance and close cooperation between boards and management, I am confident these agencies can improve returns to the State Government and deliver tangible benefits to the people,” he said.

Hajiji also underscored the need for leadership that is dynamic, professional and results-driven, particularly as Sabah enters a new phase of development driven by strategic investments, digitalisation, new energy initiatives and social development.

“The measures being taken are not merely about changing leadership, but represent a comprehensive effort to ensure GLCs are competitive and ready to spearhead Sabah’s new development agenda,” he said.

He added that Sabah must also begin venturing into new strategic sectors such as artificial intelligence (AI), renewable energy, aerospace, data technology and other industries aligned with global growth trends.

The Chief Minister welcomed the Malaysian Anti-Corruption Commission’s (MACC) recommendation for each agency to appoint a Certified Integrity Officer or establish an Integrity Unit as an internal oversight mechanism.

“This will help foster a cleaner, more transparent and accountable work culture across all organisations,” he said.

Later, Hajiji received cheque replicas totalling RM131.6 million from various GLCs and statutory bodies, with the largest contribution coming from SMJ Energy Sdn Bhd, which paid RM50 million in dividends and RM1 million to the State Natural Disaster Committee.