Sarawak Partners with World Bank to Reform SOEs and Strengthen Governance

In a landmark step toward future-proofing its economy, Sarawak has signed a historic three-year agreement with the World Bank and Malaysia’s Federal Government to introduce sweeping reforms in State-Owned Enterprise (SOE) governance and public financial management. The initiative is designed to ensure Sarawak’s continued prosperity while embedding stronger accountability and inclusivity in its governance systems.

A Turning Point for Sarawak

At the signing, the Premier of Sarawak, The Right Honourable Datuk Patinggi Tan Sri (Dr) Abang Haji Abdul Rahman Zohari bin Tun Datuk Abang Haji Openg, underscored the transformative nature of the reforms.

“This agreement marks a turning point for Sarawak. With stronger governance and modern financial management in line with international best practices, we are laying the groundwork for sustainable prosperity. Our partnership with the World Bank ensures Sarawak is not only resource-rich but also a model of accountability, financial resilience, and inclusivity,” the Premier said.

The partnership reflects Sarawak’s ambition to strengthen fiscal sustainability and to manage its resource wealth more effectively. By tightening financial discipline, the State is preparing to translate current prosperity into long-term inclusive growth and higher-quality jobs.

Core Reform Initiatives

The reforms will be structured around several key initiatives:

• New State Ownership Policy – establishing clearer rules and oversight frameworks for SOEs, ensuring transparency and stronger performance.

• Sarawak Corporate Governance Code for SOEs – embedding accountability and internationally aligned governance standards for state-linked enterprises.

• Results-Based Budgeting (RBB) – rolling out a modern budgeting approach that directly links resource allocations to policy priorities and outcomes, enabling greater efficiency in government spending.

Together, these reforms will help safeguard revenues, improve fiscal management, and ensure public resources are used effectively to benefit all Sarawakians.

Tangible Benefits for Citizens

The Premier highlighted that the reforms will enable Sarawak to channel resources into inclusive development, with tangible outcomes such as:

• Better rural connectivity, bridging gaps between urban and rural areas.

• Investments in education and skills training, preparing Sarawakians for the jobs of the future.

• More effective delivery of public services and infrastructure projects.

By ensuring stronger SOEs and better governance, Sarawak aims to guarantee that economic growth is not only sustained but also broadly shared across society.

World Bank Endorsement

The World Bank praised Sarawak’s leadership in pursuing these reforms. Zafer Mustafaoğlu, World Bank Division Director for the Philippines, Malaysia, and Brunei, said the initiative demonstrates Sarawak’s commitment to inclusive and sustainable development.

“Sarawak is demonstrating bold leadership in reforming SOEs and strengthening public financial management and economic governance. As having achieved high-income status at state level, these additional reforms are critical to sustaining inclusive growth, enhancing accountability, and ensuring that prosperity is broadly shared among Sarawakians,” Mustafaoğlu said.

“The World Bank is proud to support Sarawak with global expertise and proven best practices,” he added.

Building on Past Collaboration

This new agreement builds on a strong foundation of cooperation between Sarawak and the World Bank. Since 2022, the partnership has included analytical studies on SOEs and early steps toward implementing results-based budgeting. The collaboration has since grown into a strategic reform programme, with the World Bank providing:

• Targeted technical expertise on SOE governance.

• Institutional capacity-building to ensure reforms are sustainable.

• Advisory support to embed RBB as a cornerstone of Sarawak’s governance framework.

Looking Ahead

With this agreement, Sarawak is positioning itself not only as a resource-rich economy but also as a regional model of strong governance and financial resilience. The reforms are expected to strengthen investor confidence, improve efficiency in public spending, and create the conditions for sustained high-income growth that benefits every Sarawakian.

By working closely with the World Bank and Malaysia’s Federal Government, Sarawak is setting a precedent for how state-level reform can drive national economic transformation.