The state government has been urged to come clean and tell all about the investment cost to-date and the losses suffered in the state-owned wafer fab 1st Silicon (Malaysia) Sdn Bhd up to its proposed merger with a German foundry X-FAB Semiconductor Foundries AG.

The government must accept responsibility for 1st Silicon's astronomical losses with an explanation to the people through a White Paper to be tabled in the state legislative assembly, DAP Bandar Kuching MP Chong Chieng Jen said in a statement today.

According to Chong, the company's track record from 2000-2003 showed it suffered accumulative losses of RM2.491 billion

He said although it recorded a small profit of RM6.7 million in 2004, this was not due to the company's performance.

"The key factor that turns the reds into profit is because of an item "Gain on disposal of property, plant and equipment" amounting to RM850.32 million. Without the gain on disposal of property, plant and equipment, the company would have recorded a loss of RM843.57 million," Chong pointed out.

"The question all Sarawakians are entitled to know is how did the Sarawak government fund the purchase of the property, plant and equipment from the company, so that it could record a gain of RM850.32 to turn the company's account into profit," he said.

"If we look further and analyse the revenue to costs of goods sold ratio of the company, it throws doubt on the viability of the company," he said.

Forr 2002, the revenue of 1st Silicon was RM113 million and its cost of sale was RM505 million, indicating it cost the company RM4.469 to earn every RM1 sale.

For 2003, the revenue was RM170 million and its cost of sale was RM550 million, indicating it cost the company RM3.235 to earn every RM1 sale.

For 2004, the revenue was RM278.7 million and its cost of sale was RM746.6 million, indicating it cost the company RM2.678 to earn every RM1 sale.

Giving up its goals

"Given such a track record, I doubt if anyone will be interested in having a merger with the company unless there is some other extraneous benefits, e.g. profit guarantee, transfer of costs to another company, free loans, etc. which ultimately, will burden the state coffers."

Chong said while 1st Silicon has prided itself for having used the 0.25 and 0.18 micron technology, X-FAB Semiconductor Foundries AG is only well-known for using the technology ranging from 1.0 to 0.35 micron.

Does the merger mean that 1st Silicon is giving up on its aspiration to be in the fore-front of these wafer fab technology, and in actual fact, is going backward, in terms of technology?'

The opposition MP said out of some 1,000 workers employed by 1st Silicon, the government must produce a detailed account of the number of local workers, their job designation and the number of foreign workers and their respective job designation.

The account must also reveal the total wages and allowances paid to foreign workers and the percentage of these payments out of the total wages and allowance paid to locals.

"There is no point to claim that the government is creating job opportunities for Sarawakians when a large portion of the money spent is paid to the foreigners. Furthermore, with RM2.5 billion losses in four years, more jobs would have been created had it not been invested in 1st Silicon."