Datuk Seri Mohd Shafie Apdal is pushing back on claims that the Warisan-led government triggered the collapse of Sabah Forest Industries (SFI), saying the company was already in financial distress when he took office in 2018.

The former Sabah chief minister revealed that he had refused to approve timber extraction permits from SFI’s 700,000-acre estate in Sipitang — a move he says was intended to protect the industry from being reduced to “just another logging operation.”

“I said I refuse to sign because I want the industry to be there. No timber can be extracted from SFI. From Sipitang. About more than 700,000 acres,” Shafie told reporters following a breaking-of-fast event in Sandakan on Sunday night. 

According to Shafie, SFI was already under receivership by the time Warisan came into power.

“Since when it was transferred to Lion Group, it was already by the bank. It is already owned by the bank,” he said.

While the state government had no stake in SFI, it retained authority over timber licence approvals — the only card left on the table.

“(We) only have the right to sign to extract timber. That’s it. But ownership of the company is none.”

Shafie added that there were efforts at the time to take over the company purely for its timber assets.

“They just want to sell the timber. They don’t want to process the paper.”

To keep SFI’s pulp and paper operations alive, Shafie said he flew to Shenzhen to meet a potential investor willing to maintain the mill’s original purpose. 

The pitch: the investor gets a 70% stake, Sabah keeps 30% — and doesn’t pay a cent.

“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.”

“It is already with the bank. It is under receivership. How can I say that it was my doing? That is… it is not because of us. We want to salvage. That is why we find investors.”

At the time, SFI was in the process of being acquired by Pelangi Prestasi Sdn Bhd, a company reportedly linked to tycoon Tan Sri Syed Mokhtar AlBukhary. 

A deal struck in April 2018 when Barisan Nasional was still in power in the state government. 

The firm had agreed to buy a 98% stake in SFI from Ballapur Industries Ltd for RM1.2 billion.

The Barisan Nasional government had greenlit timber licences under the deal, but when Warisan took power, it refused to honour the approval — instead setting new preconditions. 

That move triggered a legal battle.

Shafie said his priority was to protect jobs and preserve industrial activity in Sipitang.

“We salvage. That’s our goal. To help 2,000, more than 3,000 Sabah people who work in the farm,” he said.

“When I went to the factory, the farm has grown grass. I said, what have they done?” – March 24, 2025