Bandar Kuching MP Chong Chieng Jen today called for a parliamentary inquiry to look into the huge financial losses suffered by state-owned wafer foundry 1st Silicon (Malaysia ) Sdn Bhd.

'If the company continues to incur operational losses in hundreds of millions and there is no concrete plan to reverse such trend, then it would be better for the company to go into liquidation and start selling off all its assets to cut losses," he said in a statement.

1st Silicon is 70%-owned by the Sarawak Economic Development Corporation (SEDC), an investment arm of the Sarawak government. Its principal business is manufacturing semi-conductor wafers.

Chong, who is also state DAP deputy chairperson, said although the company recorded a RM6 million profit in 2004, this was not indicative that the company was still on the right track.

"A brief study of its 2004 accounts will reveal that the company's operation that year was no better than its previous years' operation," he said.

This was because last year the company recorded a RM467 million gross loss, with RM278 million sales revenue and RM746 million sales cost. "By implication 1st Silicon was spending RM2.7 to earn RM1," said Chong.

He said in 2001, the company recorded a loss of RM809 million, a RM881 million loss in 2002 and a RM727 million loss in 2003.

State funds

He said the company was able to make a profit of RM6 million in 2004 because it sold a substantial part of its assets (property, plant and equipment). The assets sale netted RM850 million, thus allowing the company to convert its losses that year into a profit.

Had there been no assets sales, 1st Silicon (Malaysia) Sdn Bhd would have incurred a loss of more than RM800 million in 2004.

Chong said 1st Silicon continued to survive due to the injection of state funds.

"But how long can our government continue to sustain such losses every year? At the end of the day, the people will be made to pay for these losses, albeit, indirectly."

Beside having a large equity base of RM1.874 billion, 1st Silicon has since its inception been raising huge loans from international financial institutions.

Chong said these loans were guaranteed by the Sarawak government with some by the Federal government .

"If the RM700 million pre-tax loss of Bank Islam Malaysia Berhad can cause such a big uproar and raise so much concern in Parliament, then we should also have the same concern, if not more, for the annual losses of 1st Silicon," said Chong.