Perikatan Nasional hits back at UMNO’s criticisms of new joint investment firm by 4 opposition states

KUALA LUMPUR: Leaders from Malaysia’s four opposition-held states have fired back at criticism from across the aisle regarding a company jointly set up by them to attract investment and boost their economies.
The venture has also prompted a warning from Deputy Prime Minister Ahmad Zahid Hamidi that it has to ensure its activities in rare earth exploration comply with national regulations.
Kedah Chief Minister Muhammad Sanusi Md Nor on Wednesday (Sep 4) dismissed comments from a United Malays National Organisation (UMNO) Supreme Council member that the formation of the SG4 (State Government 4) Group investment firm was “politically motivated”.
“Next week, it will be SG8. Tell that to Puad Zarkashi. He doesn’t have to worry (about SG4),” Mr Sanusi said as quoted by the New Straits Times, threatening an opposition takeover by Perikatan Nasional (PN) in more states in the future.
The SG4 grouping, which was formed in September 2023 and refers to the four opposition-controlled state governments of Kelantan, Terengganu, Kedah and Perlis, announced on Monday (Sep 2) that it had set up a company to share revenue equally.
The states have framed the company as a way to catch up with the other more developed government-held states. They previously claimed to have been sidelined by the federal government in terms of allocations and infrastructure projects due to their political alignment.
Official statistics show that Kelantan (13th), Perlis (12th) and Kedah (11th) had three of the lowest gross domestic product per capita among Malaysia’s 13 states in 2021. Terengganu came in ninth, ahead of Sabah.
In particular, the SG4 company is looking to exploit the opposition states’ abundant resources of rare earth deposits, highly sought in the manufacturing of high-tech products including smartphones, semiconductor chips and electric vehicles.
SG4 Group is advised by former prime minister Mahathir Mohamad, who on Tuesday posted on social media platform X that the states need “efficient management” to ensure the economic benefits from these natural resources can be shared with their people.
UMNO Supreme Council member Dr Puad questioned the SG4 company in a Facebook post on Tuesday, saying that issues of manpower, assets and shares could arise if power changed hands in the opposition states.
“It’s not impossible that BN will reclaim Terengganu, Kedah and Perlis,” said Dr Puad, referring to the UMNO-led Barisan Nasional coalition, which is part of the unity government.
Dr Puad, who is also speaker of the Johor state legislative assembly, took aim at Mr Sanusi, describing him as a person who was not fond of sharing, in a jibe at the revenue-sharing aim of the SG4 company.
“Therefore, the setting up of the SG4 company is politically motivated, not for business. What more if its advisor is Tun M (Dr Mahathir),” he wrote.
Dr Mahathir, a vocal champion of Malay and Muslim rights, has in the past been accused of playing up issues of race and religion for political gain.
Mr Sanusi on Wednesday directly addressed Dr Puad, pointing out that BN held only two state seats in Kelantan while not having any in Kedah, Terengganu and Perlis.
“I want to tell him that PN will capture Pahang, Perak, Melaka and Negeri Sembilan (in the next state elections). We will be further expanding (the PN state administration),” Mr Sanusi told reporters in Kedah.
Mr Takiyuddin Hassan, PN’s chief whip and a Kelantan federal member of parliament, said on Tuesday that Dr Puad did not understand the role of SG4’s company.
“When a company is established, it will surely have its shareholders and they can choose to exit anytime if they do not wish to remain with the company,” he said at a press conference in Kota Bharu as quoted by Berita Harian.
“If for example there are changes in parties in the four states, and they (the current members) still want to be with the SG4 company, that is not a problem.”
Mr Takiyuddin, who is also secretary-general of PN component party Parti Islam Se-Malaysia, also left the door open for other states to join the SG4 company if they were interested.
Local media previously reported that the SG4 company will focus on five key economic clusters, with each of the four states holding 25 per cent equity.
These clusters are economy and industry; green technology; infrastructure and logistics; trade and investment and agriculture and food security; as well as education and human capital.
Deputy Prime Minister Ahmad Zahid, who is also UMNO president, said on Thursday (Sep 5) that the SG4 states should ensure their rare earth element (REE) mining activities comply with national regulations and ecosystem.
While REE prices have dropped significantly due to stockpiling by certain countries, there is still potential, Mr Ahmad Zahid said as quoted by the Star.
“I believe that the SG4 has good intentions in forming a company to oversee REE mining,” he said.
“The four states could have their own strategies, but they are still subject to the taxation and ecosystem set by the federal government.”
Dr Mahathir has said that the formation of the company is not intended to bypass the federal government, but to support the states left out from benefiting from the nation’s wealth.
“In Terengganu and Kelantan, there are rich deposits of rare earth elements and the same can be said for Kedah. Perlis has dolomite, which is used in processing REE,” he said at a press conference in Selangor on Tuesday, as quoted by Free Malaysia Today.
“So our goal is to ensure that all the wealth we generate is distributed equitably so that states that have fallen behind can also benefit.”
Terengganu Chief Minister Ahmad Samsuri Mokhtar said at the same press conference that the SG4 company already has investment inquiries from government-linked companies and foreign firms interested in exploring REE in the states.
However, he noted that these inquiries were still in the early stages, mainly focusing on obtaining exploration licenses and identifying suitable areas for development.
“We are currently in discussions with foreign investors, but we are still in the process of determining the company’s management as we are in the early stages,” he was reported as saying by the Malay Mail.
Dr Mahathir urged the leaders and people in the four states to stop having a mentality that they will never be able to change the fortunes of their states.
“Leaders must have big aspirations to develop their states so the rewards can be felt by every layer of society,” he wrote on X.