Loan approved to AirAsia relevant – Mositun
KOTA KINABALU: Let the state government and bank’s wisdom over the RM300 million loan approved by the Sabah Development Bank (SDB) to AirAsia prevail, said PBS vice president Datuk Johnny Mositun.
Mositun, when commenting on SAPP president Datuk Yong Teck Lee’s call on the new Sabah government to put a stop to the loan, said he believed SDB and the then state government decision to approve the loan to AirAsia is relevant to the reduced OPR rate as announced by Bank Negara.
Yong’s argument on the matter had good grounds but it did not sound somewhat political, Mositun opined.
“To me let the wisdom of the state government and bank prevail as during this time when we are facing challenges brought about by the Covid-19 pandemic.
“All levels of businesses are facing and taking risks and I am of the opinion that the loan can be converted into equity,” he said.
Mositun added that the state is also dependent on the aviation industry in the long run to safeguard its tourism industry.
“We should be more accommodating and think outside the box… and not to mix business with politics,” he stressed.
On Friday, Yong in a statement called for the loan to be stopped as SDB is mandated to provide development financing to projects in Sabah and not on risky ventures.
The airline industry is hardly something that SDB should be taking risks in during the coronavirus pandemic. Any banker and businessman know what crisis the airline industry is facing, said the nominated assemblyman.
According to national and international news reports, SDB has approved a RM300 million loan to Air Asia “to keep the airline afloat amid the coronavirus pandemic”. The reports stated that the RM300 million loan “would tide the airline over for two months, financing local operations.”
What will happen after the two months and the airline has not recovered? What if Air Asia ends up like Dragon Air, which is a subsidiary of the mighty Cathay Pacific, Hong Kong’s flag carrier? (two days ago, Cathay Pacific had shut down Dragon Air) Yong asked.
According to the same news reports, AirAsia is reported to be raising RM2.5 billion by year-end. Two weeks ago, “its long-haul arm AirAsia
X Bhd proposed a US$15.3 billion (RM63.5 billion) debt restructuring and cutting share capital to avoid liquidation.” It is alarming that the reports are already talking about “avoiding liquidation.”
What is RM300 million compared to the RM66 billion debt that Air Asia exposed to? How can RM300 million of SDB’s meagre funds help to keep Air Asia afloat? RM300 million is only 4.5 percent of the debt exposure of Air Asia.
Instead, the RM300 million can do a lot to help revive the Sabah economy by lending to the housing or agricultural or construction sector in Sabah, Yong stressed.